These are quite uncertain times, everyone’s going through a hard time which we had never even predicted of. But amidst rising Covid-19 Cases, Lockdown, Losses in Businesses, shutting down of various Businesses, weakening of the Economy…what is a positive thing?
The Markets over the globe have turned volatile in the last 1 year due to the Pandemic. Well, talking about the Indian Stock Market…it is surely volatile but the Market is still holding up high, right? About 3 months ago, in February 2021, the Sensex surged up to a whopping 50,000 points thereby creating History!
About 1 year ago, the Economies worldwide had collapsed when the Covid – 19 Pandemic hit the Globe. The Indian Stock Market Indices stooped to its lowest from last 3 years in 2020.
Since the last year, the world has changed, thereby transforming our lives, our Economies & the fortune of our Businesses!
But isn’t it a thing to think about that the Sensex has literally doubled from 25,000 to 50,000 in last 1 year. It is a great milestone that the Indian Markets have achieved…right?
The history repeats itself…
Whenever the Markets have taken a dip they have emerged out to be stronger than before touching new highs. For a long term Investor, the Short Term Corrections don’t matter!
Still the question remains…why are the Stock Market indices soaring high when the Economy is so fragile at this point of time…???
Well, for starters the Pandemic has affected the small businesses immensely…which are essential for the real economy but have not affected the Equity Markets as such!
The Stock Markets are forward looking, thereby spreading a wave of optimism around the country. The news of Vaccines & better survival rate are acting as boosters for the Economy. A more convincing explanation towards the rise is the decreasing Interest Rates. There are petty chances of the Bank Rates rising in the near future. Thus, the other Investment Avenues like Equity are driven upward.
During this period, India has seen lot of Inflows from Foreign Investors. This shows the potential of India & how keen the foreign Investors are to invest in India. Thus, this depicts optimism.
Moreover, the Markets have seen lot of new retail Investors in last 1 year who are entering the Stock Markets directly or through Mutual Fund SIP Route. According to the AMFI Data, Mutual Funds added more than 81 Lakhs Investor Accounts in 2020 – 2021. Particularly Millennials have recognized the importance of Savings & have learnt a lifelong lesson of saving for the rainy day. Some people had their surplus to invest since there was no spending on the fancy things while others tried their luck through trading in Stock Markets. Thus, the overall participation of Retail Investors has considerably increased.
The Market is soaring high but if you are still worried about the Market Corrections…here are a few points to keep in mind & then take a call accordingly…
- Check the tenure left for achieving your Goal
If you are nearing your Horizon for achieving your Goal…you can shift your funds from the high volatility Equity Funds to less volatile Short Term Funds. By doing this, you can preserve the accumulated growth of your Investments.
It is always wise to invest into Mutual Funds through Systematic Investment Plan route. By investing through SIP route you make sure that your Funds are less exposed to Market Volatility. You can reap the benefits of Rupee – Cost Averaging.
From last 1 year we can clearly see that Technology & Pharma Sectors have emerged as two Strong Sectors on the frontline. However, investing in Sectoral or Thematic Funds comes with its own share of Risks but it is worth giving a try.
It is rightly said by Warren Buffet…“It is wise for Investors to be fearful when others are greedy & greedy when others are fearful.” In 2020, the Markets had a sharp fall, there was a free fall in the Stock Prices. For an aggressive Investor that would have been a big opportunity. It was like going on a Stock shopping spree with discounted rates. Today, the same stocks have nearly doubled or even quadrupled!
To conclude with, beating all odds the Indian Stock Markets have always been on a winning streak and are expected to continue their optimistic rally in the coming years too!