There is a lot of volatility in the stock market at this time. The US market, which has an impact on the worldwide equity market, has seen a fall of 9 percent in the last one month amid fears of a hike in interest rates. The S&P 500 closed down 1.2 per cent on January 25, 2022.
If we look at the domestic market, the Sensex has broken around 6 percent in about 1 week. Like the giants, small-medium stocks have taken a beating and have lost nearly 8 per cent. Due to the increase in the cases of Omicron variants, the negativity in the market has been seen increasing. Apart from this, the decisions of the US Fed meeting are going to come today. Due to which there has been a lot of panic in the market before.
Meanwhile, geopolitical tensions have also been rising in Eastern Europe and West Asia. The effect of all this has been seen on the market. Apart from this, the Union Budget coming on 1 February 2022 can also have its effect on the market. In such a situation, let us see what strategy we should adopt if such heavy volatility continues in the market.
take profit
Amol Joshi of Plan Rupee Investment Services That is to say, if your investment is getting returns close to your target, then book some profits and keep it in your pocket and put the profit money in low volatility investment options. Apart from this, you can put your funds in a fixed deposit of any big bank or you can put it in any liquid fund and overnight fund. The returns in this type of instrument are low but they do not carry much risk. However, such investors who are far from their target need not panic and stay invested.
Amol Joshi says that the market often digests the already happening events. On this basis, if the market has digested the impact of the US Fed meeting, then we should remain invested.
Should you shop more?
There can be a good chance of a downside in this correction. Those who invest through SIP or through STP can make additional investments at the current level on lump sum basis. They will get the benefit of the fall in the share price. Well-known investment advisor Kalpesh Ashar says that there is no reason to panic at this time. The recent fall is not a major correction considering the strong rally of the last two years. The performance of the companies is showing signs of improvement and this is also a good sign for the market.
What to do in IPO investment?
Recently, there has been a huge decline in the shares of all the listed companies. Nykaa’s share price has fallen 21 per cent from its high. However, the stock is still 48 per cent above its issue price. Similarly, the IPO of Zomato got huge support from the investors. The stock has slipped 41 per cent from its highs but is still 31 per cent above its issue price. In such a situation, investors can choose such good stocks in this fall whose business model is strong and whose fundamentals have not changed.
Deepak Jasani of HDFC Securities says that investors should maintain a mental stoploss in their mind to avoid huge losses in an IPO. For example, while investing in an IPO, investors should decide in their mind that I will not take a loss of more than Rs.2000 in this IPO. This will mean that you will not be stuck in any one IPO and if needed, you will be able to move out of the loss making IPO and invest money in a better IPO.
Deepak Jasani It further said that investors should be cautious about IPOs of companies whose business model they do not understand. During the last few weeks, the shares of Paytm have seen a fall of 17 percent. The stock is currently trading at 57 per cent below its issue price. This means that if an investor would have made a minimum investment of Rs 12900 in this IPO, then he would be in a loss of Rs 7353. Several brokerage houses have raised concerns about the strength of the company’s business model and its prospects of returning profits.
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