Samvat 2079, the ancient Hindu calendar year which will start on Diwali, is likely to stay volatile considering the deterioration in global macros and uncertainties in western economies. There are hopes that rising interest rates, any further outflows by foreign institutional investors (FIIs) and a fall in the rupee may keep sentiment jittery going ahead.
Of late, as much as 44 per cent of stocks on the BSE have tanked up to 89 per cent since last Diwali (November 4, 2021). On the other hand, the benchmark BSE Sensex declined nearly 2 per cent during the same period. Those who tried to time such stocks must have witnessed massive erosion in their wealth.
So, what should investors do to protect their wealth amid the ongoing volatility? Business Today caught up with various money managers to understand what mistakes investors should avoid considering the tepid economic scenario globally.
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Pawan Parakh, Fund Manager, Renaissance Investment Managers, smallcase manager said, “During uncertain times, several business models get fractured which leads to bankruptcy. Hence investors should avoid investing in weak businesses. Investors should also avoid companies with high debt and poor corporate governance practices.”
Sneha Poddar, AVP, Retail Research, Broking & Distribution, Motilal Oswal Financial Services advised investors to avoid getting trapped in a volatile market by buying at the top or exiting at the bottom. Many investors lack diversification in their portfolios. So instead of panicking, they should grab the opportunity of reshuffle their portfolio and add quality stocks across growing sectors at lower prices to generate good returns in the long term.
“Many investors also discontinue their ongoing SIPs while they forget that investment at such times generates alpha to the portfolio in the long run,” Poddar added.
Vikas V Gupta, CEO and Chief Investment Strategist, Omniscience Capital, smallcase manager added that getting scared of market volatility and not entering the markets, going to cash, trying to time the market, going towards large debt allocations, or gold are some of the mistakes investors should avoid.
He further said that going all in with a large lumpsum with a FOMO mentality is also wrong. “Ideally, a systematic monthly allocation starting with a reasonable lumpsum and judicious allocation to relevant growth vectors is something investors can work on,” Gupta added.