Buy on dips, a good strategy in southward market

As Indian markets witnessed their worst fall in the recent times on Tuesday, now what is puzzling the investors most is whether they should buy on dips or sell on rallies?

S&P BSE Sensex has lost nearly 2,000 points in just six trading sessions, no doubt the declaration of LTCG tax played a vital role, but the major cause was the sell-off in global markets. As the near-term trend has been disrupted due to the global sell-off in equities, we feel this is an opportunity for long-term investors to enter into quality stocks instead of liquidating their positions.

We observe that 'buy on dips' is the most common advice that has come from analysts and market experts. There is a unanimous call to start accumulating stocks as they fall with an investment horizon of 12-24 months.

As we see a revival in this earnings season, many companies both in the large cap and mid cap space have posted good numbers in this quarter and have a potential upside. So long-term investors should stay invested and look for a healthy buying opportunity, if the market falls, as staying invested in stocks for the long run is the only way investors can make money in equities rather than panicking during corrections.

Hence, in the current market scenario buying on dips can play a vital role for long-term investors to maximize their gains as well as benefit from averaging their cost of investment.