Invest during the time of coronavirus: Be wise
Invest in the time of corona virus. Yes…. It is really wise to do so … as it will gather our resources and our strengths and will allow us to review our weakness.
In the last month amid coronavirus pandemic, we have seen a significant fall in the equity markets around the world. Many market experts say that like much other crisis, this too will pass and come to an end, but most famous for the investors to keep in mind post the ongoing impact in the markets. Well, read out our piece on exchanges with the help of experts views.
In the last month amid coronavirus pandemic, we have seen a massive fall in the equity markets around the world. Traders are making money by 1 or 2 days target. In the case of the investors, this is a time to worry if not a lot of it but still, and some are concerned to lighten up their portfolio by selling the low valued stocks.
Many market experts say that like much other crisis, this too will pass and come to an end, but most famous for the investors to keep in mind post the ongoing impact in the markets. They may maintain asset allocation discipline to avoid any substantial loss. But what investors might do in the current coronavirus situation? Should they delete some of the entries in their portfolio or buy more stocks at such low levels? Or they should wait for some more correction to buy good blue-chip companies at more low valuations?
What should investors keep in mind?
Volatility is a part of the share markets. Economy downfall, single-digit GDP numbers, high inflation, wrong IIP numbers are all waiting at our doors to knock and make the situation worse. But investors should not panic. Keep calm and take the decision one by one.
Equity investors can turn their portfolio allocation towards the large-cap and multi-cap stocks.
One should diversify the portfolio. So, it would also be advisable to have 10-15% of the portfolio’s allocation in the gold as an asset class. Gold is negatively correlated to equities. It performs exceptionally well during stock market crashes.
This is a prudent time to increase exposure inequity in a staggered manner. Empirical evidence retreats to the fact that investing during market crashes even if you can’t catch the elusive bottom can generate super-normal returns over the long term.
One should use the current correction to increase their SIPs, MF equity, and asset allocation kind of products in their portfolio.
Many stocks by the experts’ choice – one can buy/sell/hold?
Healthcare and Pharma stocks will get some benefit after the COVID-19 relief after things get normal. So one can buy shares like Dr Reddy, Abbott India, Lal Path Labs, Cadila, Biocon, Lupin for long term.
Healthcare will get a more significant boost by the Government in the future as well. One can buy large-cap stocks like HUL, ITC, Bajaj Auto, Castrol, L&T and good dividend yield stocks such as Nestle for long term horizon. Buy these with an investment.Sell all those stocks which are giving you no profit from the time you added the shares in your portfolio. Sell them as soon as possible.
Sell low margin profit stocks. Avoid FMCG, metal sector. One should redeem some of their fixed-income investments to make fresh lumpsum investments in equity funds or top up existing equity investments. Doing so may allow them to buy more units at lower NAVs and in turn, reduce average investment cost.
This would help them in creating more significant corpus when the market recovers, and thus help them to reach their financial goals sooner. Avoid Banking stocks, NBFCs, financial sector stocks. According to the experts’ in the financial invest in stocks worst is yet to come. But due to the profit margin, one can relook at Axis Bank to add in the portfolio for the long term.
One can buy blue-chip companies like TCS, Infosys, RIL at low levels.
Invest systematically and allocate good stocks. If you are invested in mutual funds, then don’t just redeem all the money. Stay invested in a lot of good SIPs with long term view. Asset allocation is essential. Don’t put lumpsum money.
“Even though the market has come down, the bottom has not yet come, and we may see NIFTY touch 6000-6500 levels”-says Bose. So, don’t just panic and sell to have cash. Stay invested in best, fundamentally strong stocks for the long term. If the objective is to earn money after five years, then forget about the current portfolio.
One should partly buy good shares at low levels and add as a SIP on their collection. Last but not the lowest invest in a restricted manner and put some liquidity for emergency during such a volatile time. Also, don’t forget to take the advice from your portfolio manager or financial expert before doing any changes to your portfolio.