Sensex says, STICK to your STOCKS

The market is volatile. A sudden fall initiated a fear in the mind of the investors. Reliance IPO excitement almost resulted withdrawal of from the secondary market. The market noticed large outflows of FIIs adversely impacting market sentiment. In such a scenario, what could be recommended investment strategy for long-term equity investors?

The strategy is to remain unfazed by near-term market movements and invest in mid-cap funds. Key is to maintain a balance of mid-cap funds and actively managed funds in building long-term portfolios, alongside themes such as Infrastructure, natural resources and gold. The market is uncertain and definitely there is no reason to worry about your portfolio if it is diversified. In a volatile market, mid-cap funds have always performed better and if the funds are managed by fund managers having knowledge on which funds to invest, and then surely it’s a win-win situation for the investors. It’s necessary to keep a close look in the sector funds which are not sensitive to global trends which potentially give rise to such fluctuations. It gives an indication of the sectors performing in a volatile market situation and when the market is stable or upbeat. India is surely in the midst of strong domestic growth. With a positive indication of conducive global monetary environment coupled with stable domestic macroeconomic factors, monetary policy going forward is widely expected to support economic growth. Market performance over the medium term will thus benefit from the strong growth story as well as the increased investment interest it shall attract from both domestic as well as global investors.