For equity investors, staying the course is key right now

Staying the course is crucial in the present situation which can benefit you when the market stabilizes and grow further asserts, Harshad Chetanwala, Co-Founder- MyWealthGrowth.com.

The stock market continue to remain volatile over the last few weeks particularly due to the Russia-Ukraine crisis. This event has resulted in a lot of uncertainties at the same time impacted the crude oil prices which has been rising quickly as Russia is one of the biggest producers of oil in the world. Sensex was almost down by 15 per cent from its peak of October 2021 bringing last year’s return to single-digit which were extremely high over the last couple of years. 

The present market situation is making few equity investors around the world and in India a little nervous. While these events are not much in our control, it is important not to make knee jerk reaction to this situation. The stock market may continue to remain volatile for some more time due to the current geopolitical crisis. At the same time. there could also be some impact as the US goes ahead to increase their Fed rate as per their plan. 

The biggest concern for India could be inflation. At some point in time, the government will have to raise fuel prices and it will directly impact inflation and RBI will have to raise interest rates at some stage. Generally, when interest rates increase, equity tends to underperform for a period. 

Considering all these scenarios, here are a few pointers you can consider from your portfolio and equity investment perspective. 

• Staying calm and remaining invested in good stocks or equity funds is key. 
• Avoid panicking and withdrawing from equities, if you do not need money at present. 
• Continue with your SIPs, you will buy more units as the NAVs have decreased. 
• Need not wait for the market to stabilize to start your additional SIPs. 
• Avoid investing the entire lumpsum amount in one go. 
• Lumpsum can be invested gradually by adding 10-15 per cent every time the market consolidates. 
• It could be better to follow a large-cap oriented investment plan at present. 
• Large Cap, Large & Mid Cap and Flexicap Funds are better options to invest in. 
• Avoid lump sum in small-cap funds even though they have corrected the most since the beginning of 2022. Historically these companies get hit the most in a volatile market. 

Equity by nature are meant to be volatile and this volatility also creates an opportunity to generate an additional return. This characteristic of equity makes it one of the best asset classes to invest in from a return perspective. Hence, staying the course is crucial in the present situation which can benefit you in the long run when the market stabilizes and grow further.