Due to Global Factors like fall in Chinese stock market and domestic issues like delayed GST bill and no immediate positive trigger coupled with insane valuation of many small cap companies has led to a very negative and å fearful start for the Indian Share Market; it has already sent shivers down the spine of investors and traders community.
Should Investor Review Their Portfolio?
Yes; an Investor should always review their portfolio from time to time, but first we really need to understand the meaning of review. An investor can look at the daily price chart; Highs & Lows and then try to predict the stock’s price one month away, one week away or sometimes even one Hour. Many times investors end up buying stocks on the basis of its current market price rather than focusing on its core strength and Business fundamentals.
An Ideal investor is one who do not watch the market daily and stay away from the wagaries of market’s up and down movements in a day to day life. As long as you have paid a good bargain price and the business you had invested hasn’t changed dramatically, then there is no need to worry about the future. So a proper review of portfolio is required and one have to exit from overvalued stocks of his portfolio.
Should you stay invested in Medium to Longterm?
Yes; looking at the Indian economy and a fact that it is on growth track along with a political stabality, falling crude prices, increasing GDP and along with other positive factors; one should not remain invested based on their long term financial planning. We may become the largest economy among emerging markets and outshine China in growth terms.
This particular phase is unlike 2008 where negative sentiments were way too higher so keep investing money at every good correction you see and take a review of your current holding to incorporate some bluechip stocks as most of them are undervalued and avaialable at a great price; you may expect some correction in mid and small cap stocks.
GLOBAL factors affecting us?
US and China are Big markets. So any correction in these economies always have a big impact on Indian market. Like the recent fall in Chinese market has affected Indian market as well but we need to keep this in mind that this impact is short term in nature and focus on internal growth of our country which is improving. In fact if Indian markets correct at a reasonable valuation because of these global factors then it will provide a wonderdful opportunity to enter in the market.
Advice to Retail Investors & Which other instruments can they look at?
Most of Indian retail investors speculate than buying fundamentally solid Stocks and depends more on tips but considering the fact that equities are one of the best asset class which tends to outperform other investment avenues an investor should always remain cautious while picking stocks.
Falling Rupee, volatile stock market and even the erstwhile safe haven options like gold & property market has also shown a bumpy ride. The question, which most people have, is about whether they should invest in Gold/Property market or Share market right now. Gold and property market had its run already and does not command strong positive sentiments in the near present and whereas stock market also is in a correction mode yet with a strong positive outlook in the near term.
So you should invest more in equities for the next 3 to 5 years and then make aim to make good money via stocks or mutual funds and then book profit and redeem capital and invest in gold or property to convert virtual money to a real money; so right now; go invest in mutual funds and stocks at every market fall and build a good portfolio.