Investment strategy: Looking to enter the market now? Here’s what the experts suggest

New Delhi: In a context of increasing financial market volatility, the days of easy money are apparently over. Investors need to rebalance their portfolios based on their risk appetite.

Market experts believe that the latest stock market correction offers a significant entry point for investors. They also suggest that investors allocate funds aimed at diversifying their portfolios.

Domestic stock markets have seen a sharp correction in recent weeks on geopolitical uncertainty, rate hikes and rising inflation fears.

Yash Gupta, equity research analyst at Angel One, said Nifty is trading at a price to earnings of 20x and dividend yields of 1.3%, which is close to the average of the past 5 years. , with advice to investors to stay invested.

“Long-term investors may seek to invest 50% of new capital in a diversified portfolio of margin and mid-cap stocks or even they may seek to invest through Nifty and Nifty Midcap 100 ETFs,” he added. .

Portfolio allocation depends on several factors, including age, risk profile, investment horizon, etc. Avoid keeping all the eggs in one basket, the portfolio managers said.

“Young investors should have 60-75% equity allocation; 20% debt fund and gold,” said Ange One’s Gupta. “On the other hand, veteran investors should consider an equity allocation of less than 50%. .”

Market experts said existing investors should stay invested in the current market as volatility is expected to decline over the next two quarters as clarity on inflation and interest rates emerges and markets recover. adapt to the new reality.

With recent market corrections, equity valuations have become relatively attractive and additional investments can be made in pure equity funds, said Niranjan Avasthi, Head – Product, Marketing Digital Business,

Mutual fund.

“While the exact asset allocation is subject to an individual’s risk profile and objectives, one may currently overweight equities in the portfolio relative to other asset classes,” he added.

Market analysts suggest retail investors should avoid panic selling or impulse buying. They advise sticking to SIP investments. Stick to longer-term investing and asset allocation, they added.

Amit Vyas, head of product research, Equirus Wealth, said investors should follow their respective asset allocation because that’s what drives returns over a longer period. Timing an asset class should be avoided.

“There are significant corrections in the stock markets that serve as an entry point for an investor over 5 years,” he added. “Returns are never linear in stock markets and you have to be patient, avoid impulsive decision-making in fear or panic.”

Market participants have said that portfolio diversification is the holy grail of investing and should be at the heart of any portfolio construction. Each asset class plays a significant role in the portfolio over a longer time horizon.

Creating an ideal mix of equities, fixed income and gold depends on what financial milestones one wants to achieve in the short, medium or long term, Equirius Wealth’s Vyas said, suggesting investors to allocate capital after their own risk assessment.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Comments are closed.