{"id":318175,"date":"2023-11-30T05:27:52","date_gmt":"2023-11-30T05:27:52","guid":{"rendered":"https:\/\/popularindinews.com\/?p=318175"},"modified":"2023-11-30T05:27:52","modified_gmt":"2023-11-30T05:27:52","slug":"market-giving-sleepless-nights-read-this","status":"publish","type":"post","link":"https:\/\/popularindinews.com\/celebrity\/market-giving-sleepless-nights-read-this\/","title":{"rendered":"Market Giving Sleepless Nights? Read This"},"content":{"rendered":"

If a 5% to 10% fall in the equity market gives you sleepless nights, you are not cut out for a 75% to 80% allocation to equities and must reduce it.<\/strong><\/p>\n

India’s stock markets recently saw six consecutive loss-making sessions, and October ended up as the worst month for the BSE Sensex and National Stock Exchange Nifty this calendar year.<\/p>\n

The advance-decline ratio for the entire market fell to 1.02 during the month, indicating gainers exceeded losers by a small margin of 42 stocks.<\/p>\n

Within the narrower universe of Nifty 500, this ratio was even lower. After a smooth run, investors now need to prepare for a bout of volatility in the equity market.<\/p>\n

High Volatility<\/strong><\/p>\n

Several factors are contributing to the current spell of volatility.<\/p>\n

S Naren, executive director and chief investment officer, ICICI Prudential Asset Management Company, says: “Markets have lately been volatile due to worsening geopolitical tensions, rising yields on US 10-year bonds, persistent inflation, and high crude oil prices.<\/p>\n

“If the geopolitical conflicts linger, global growth is likely to be impacted.”<\/p>\n

Stay Invested<\/strong><\/p>\n

Experts advise retail investors to continue with their allocation to equities, given the Indian market’s strong prospects.<\/p>\n

Naren adds: “India has one of the best structural stories in the world. The Indian economy is poised for growth, with a number of structural reforms in progress and strong fundamentals.<\/p>\n

“Favourable demographics and demand are encouraging for the economy.”<\/p>\n

Naren further says a sharp decrease in corporate debt over the past years has paved the way for an investment cycle to begin.<\/p>\n

Impaired loans are declining, suggesting stability within the banking sector.<\/p>\n

He believes investors may end up with a good investment experience if they stay invested for the long term.<\/p>\n

Get Accustomed To Volatility<\/strong><\/p>\n

Experts say volatility is an inherent part of equity markets. The sooner investors learn to accept it, the better they are likely to fare in the markets.<\/p>\n

Deepesh Raghaw, a Sebi-registered investment advisor, says: “Some or the other negative development keeps coming, and the market reacts.<\/p>\n

“In 2013, we had the taper tantrum.<\/p>\n

“In 2016 there was demonetisation.<\/p>\n

“In 2018-2019, mid and smallcap stocks saw a sharp drawdown.<\/p>\n

“In March 2020 the markets fell due to the onset of Covid.<\/p>\n

“In February 2022, the Russia-Ukraine war broke out.<\/p>\n

“In 2022, there was global inflation which resulted in the US Fed and other central banks raising interest rates. Long-term investors need to learn to take such developments in their stride.”<\/p>\n

Investors should only put that money into equities which they will not need for the next 7-10 years.<\/p>\n

Plutus Capital investment advisor Ankur Kapur says: “When you invest in a house, which is also a growth asset, you cannot check its valuation every day because none is available. You hold it for 10 years or so and usually end up with an inflation-beating return.”<\/p>\n

“Adopt a similar approach in equities,” says Kapur. In other words, don’t allow yourself to be perturbed by interim volatility.<\/p>\n