After hitting several record highs in December and crossing many milestones, the Indian benchmark indices were muted in trade today, December 13, ahead of the outcome of the US Fed meeting later today. Moreover, the market sentiment was also influenced by profit reserve.
The 30 share BSE Sensex ended higher by 33.57 points or 0.05% at 69,584.60 level while the Nifty 50 closed at 20,926.35 level, up 19.95 points or 0.1%.
According to Nitin Rao, CEO of InCred Wealth, the current valuations are reasonable, supported by strong economic fundamentals and positive market sentiment. This suggests that markets are likely to continue to trend upwards along with economic growth, he predicted.
Rao explains how to handle a portfolio in any bull case scenario.
1) Regularly review and rebalance your portfolio to maintain your target asset allocation. For investors, it is desirable to rebalance portfolios by trimming any overweight position and maintaining some liquidity for a probable opportunity. Maintaining a well-balanced portfolio requires diligence and a commitment to regularly review and rebalance. This proactive approach ensures that your investments remain aligned with your financial goals, providing a foundation for long-term financial success.
2) Keep your SIPs going through market fluctuations for long-term wealth creation. Systematic Investment Plans (SIPs) offer a disciplined and systematic approach to investing in the financial markets. While market fluctuations are inevitable, maintaining your SIPs with these varieties can significantly contribute to long-term wealth creation. SIPs allow investors to benefit from rupee cost averaging. By investing a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high. This averages the total cost per unit over time. Trying to time the market while waiting for the “right” moment to invest can be challenging. SIPs help mitigate timing risks by spreading your investments over time, reducing the impact of market volatility on your overall portfolio. During market downturns, SIPs provide an opportunity to accumulate more units at lower prices. This positions your portfolio for potential capital appreciation when markets recover.
3) Resist chasing short-term gains and avoid investing based on emotions and the urge to make impulsive decisions based on market noise. In the dynamic world of investing, the lure of short-term gains and the emotional pull of market noise can lead to impulsive decisions that can jeopardize long-term financial goals. It is important to resist the temptation to chase short-term gains and avoid emotional investments. Short-term market noise, often fueled by news and daily fluctuations, can create a sense of urgency. Reacting impulsively to such noise can lead to decisions that are not in line with your overall financial plan. Emotions such as fear, greed, and anxiety can cloud rational judgment. Making investment decisions based on emotional impulses can result in buying at market peaks or selling during dips, jeopardizing an overall portfolio.
4) Stick to your investment plan and avoid making emotional trades. Do not be lured by stocks with attractive prices, but lack of underlying strength. Your investment plan works as a plan tailored to your financial goals, risk tolerance and time horizon. Consistently following this plan provides a structured and reliable path to wealth accumulation. While attractive share prices can be tempting, it is important to assess the underlying strength of the investment. Stocks with weak fundamentals may not provide sustainable growth, and investing based solely on price may lead to suboptimal results. By sticking to your investment plan and resisting emotional trades, you position yourself for a more secure and prosperous financial future. The discipline to stay the course even in turbulent times is a hallmark of successful long-term investors.
5) Always prioritize companies with strong financials and long-term perspectives. Companies with strong finances exhibit stability and resilience, weathering economic uncertainties and market fluctuations more effectively. This provides a solid foundation for continued growth and performance. Companies with strong financials are often better equipped to support dividend payments. For income-seeking investors, prioritizing such companies can provide a reliable income stream, improving the overall stability of the investment portfolio. By prioritizing companies with strong financials and a commitment to long-term growth, you position your investment portfolio for stability, resilience and the potential for continued success. This strategic approach improves the likelihood of achieving your financial goals in the long term.
Strategy
Overall, Rao advised investors to consider slightly increasing their equity allocation to capitalize on the current market momentum, especially in the run-up to elections.
Average investments, he recommended.
“Use market downturns to invest additional funds and build your portfolio at lower prices. Remember, even in a bull market, unexpected events and systemic risks can lead to significant downturns. Maintain a diversified portfolio and ensure adequate debt allocation to mitigate potential losses. Don’t abandon your long-term asset allocation strategy in pursuit of short-term gains,” suggested the expert.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 13 Dec 2023, 17:12 IST