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According to market players, besides the monsoon and Reserve Bank of India dampeners, prime reasons for the fall in the past two trading session, the disappointment over corporate results have already weakened sentiment considerably.
With the benchmark index, the BSE Sensitive Index, or Sensex, slipping below 27,000, losing over 1,000 points in two trading sessions, retail investors would be a worried lot.
More so because this losing streak has continued for six months now. India is among the worst-performing markets in 2015, with the Sensex falling 2.4 per cent since January.
In comparison, all the major indices such as, the NASDAQ, Dow Jones, FTSE, Hang Seng, Nikkei-225 and Shanghai are in the green.
The latter is up 51 per cent during this same period. For investors, the main worry is how long will correction continue.
Rakesh Arora, head of research, Macquaire feels the markets have started consolidating and this could continue for some time.
“Till there are new triggers in the monsoon session of Parliament, which provide clarity on issues like the Land Bill and Goods and Services Tax, the market will continue to be in the consolidation phase.” Vinod K Sharma, head of research, private broking, HDFC Securities, says things do look gloomy for some more time, maybe even three to four quarters.
The advice for investors in stocks in such circumstances: Don’t do much with your core portfolio. But book trading profits.
“Many investors wait till the year gets over because then, capital gains in equities is non-taxable.
For some time, we have been saying don’t wait for tax benefits because things don’t look good,” adds Sharma.
According to market players, besides the monsoon and Reserve Bank of India dampeners, prime reasons for the fall in the past two trading session, the disappointment over corporate results have already weakened sentiment considerably.
This, along with the slowing global economy, could make things worse in the near term.
On Wednesday, Organisation for Economic Co-operation and Development has cut 2015 global economic growth forecast from 3.7 per cent to 3.1 per cent.
Of course, such times can be good to buy as well. Arora says it could be a good time to invest, as many good stocks can be bought cheaper.
“Buying on dips is always a good strategy. Staying away never really helps,” he adds.
For mutual fund investors, things are relatively simpler. If you are investing through a systematic investment plan, a drop is generally good news because you will get more units for the same investment.
For example, if your monthly investment is Rs 5,000 and the net asset value is 50, you would get 100 units.
If the NAV falls to Rs 40, you would get 125 units.
This would translate into higher returns when the markets start doing well. For ones who have invested a lumpsum amount, it is advisable to stay put unless your investment tenure has been completed.
“Even if you have an investment tenure of five years, there is no reason to exit till it has been completed only because the market is falling."
"Events will keep on happening and market will move or down, depending on them. But for investors, targeted tenure should be pertinent,” says Hemant Rustagi, chief executive officer, WiseInvest Advisors.
Yes, stock markets can be frustrating sometimes, especially since investors were seeing some sparkle in the past year, after a long lull since 2008. But making money does need patience.
