MUMBAI: Don't jump into the market with a suitcase full of cash as yet, experts warn retail investors, as many seem attracted at the prospect of entering the market after Monday's plunge.
"Suddenly, many investors have become extra brave and want to get into the market because they think every huge fall is a great buying opportunity. But they could be wrong because we are definitely not at the bottom of the market and there would be a lot of volatility in the near term, which the retail investors would find hard to stomach," say Devendra Nevgi, founder & principal Partner, Delta Global Partners.
"They should wait for at least six to eight weeks for a clear picture on the global scenario," he adds. But the advice is meant only for those who want to invest large sums at this point of time in stocks. Existing equity investors should continue with their regular investments like systematic investment plans ( SIPs) in mutual funds, as the long-term prospects of the Indian economy and the stock market is intact, albeit somewhat foggy, say experts.
"Long-term investors can continue to invest in stocks with a three to five-year time frame in mind," says Suresh Sadagopan, chief planner, Ladder7 Financial advisories. "Investors should use this opportunity to build and consolidate their equity portfolio. The current global problems could actually help the Indian markets as lower commodity prices, especially oil prices, could moderate inflation."
"We may also be near the peak interest rates as the Reserve Bank of India may hold rates against the current global backdrop," says A Balasubramanian, CEO, Birla Sun Life Mutual Fund. "With every fall, the valuations of stock are also getting attractive, making a strong case for allocation into equity."
Not surprisingly, investment advisors also want small investors to seriously consider diversifying their portfolio into precious metals, especially gold. Gold is already attracting a lot of investor attention, especially from HNIs, because many consider gold as the best hedge against upheavals in the global economy.
"We have been advocating gold for almost four years now. Investors should seriously consider parking 5-10% of their portfolio in gold, mainly as a hedge against uncertainties," says Nevgi. However, advisors warn investors against going overboard on gold as it could cause problems in the long term.
"I recently came across portfolios of individuals where the exposure to gold is as high as 30-40%. Sure, the prospects of gold look extremely promising, but still there is no reason for you to put all your eggs in one basket," says a wealth manager who declined to be named.
Monthly income plan is another option investors should consider at this point. "MIPs are meant for conservative investors as they invest mostly in debt and take a little exposure to equity. The debt part can unlock value in the near term when the interest rates start falling. Also, the equity valuations are attractive for long-term investment," says Balasubramanian.
"MIPs could prove a win-win situation as prospects for both debt and equity look bright at this point," says Nevgi.
http://economictimes.indiatimes.com/markets/analysis/us-recession-avoid-investing-huge-amounts-as-stock-market-seen-nowhere-near-its-bottom-advise-experts/articleshow/9534750.cms
"Suddenly, many investors have become extra brave and want to get into the market because they think every huge fall is a great buying opportunity. But they could be wrong because we are definitely not at the bottom of the market and there would be a lot of volatility in the near term, which the retail investors would find hard to stomach," say Devendra Nevgi, founder & principal Partner, Delta Global Partners.
"They should wait for at least six to eight weeks for a clear picture on the global scenario," he adds. But the advice is meant only for those who want to invest large sums at this point of time in stocks. Existing equity investors should continue with their regular investments like systematic investment plans ( SIPs) in mutual funds, as the long-term prospects of the Indian economy and the stock market is intact, albeit somewhat foggy, say experts.
"Long-term investors can continue to invest in stocks with a three to five-year time frame in mind," says Suresh Sadagopan, chief planner, Ladder7 Financial advisories. "Investors should use this opportunity to build and consolidate their equity portfolio. The current global problems could actually help the Indian markets as lower commodity prices, especially oil prices, could moderate inflation."
"We may also be near the peak interest rates as the Reserve Bank of India may hold rates against the current global backdrop," says A Balasubramanian, CEO, Birla Sun Life Mutual Fund. "With every fall, the valuations of stock are also getting attractive, making a strong case for allocation into equity."
Not surprisingly, investment advisors also want small investors to seriously consider diversifying their portfolio into precious metals, especially gold. Gold is already attracting a lot of investor attention, especially from HNIs, because many consider gold as the best hedge against upheavals in the global economy.
"We have been advocating gold for almost four years now. Investors should seriously consider parking 5-10% of their portfolio in gold, mainly as a hedge against uncertainties," says Nevgi. However, advisors warn investors against going overboard on gold as it could cause problems in the long term.
"I recently came across portfolios of individuals where the exposure to gold is as high as 30-40%. Sure, the prospects of gold look extremely promising, but still there is no reason for you to put all your eggs in one basket," says a wealth manager who declined to be named.
Monthly income plan is another option investors should consider at this point. "MIPs are meant for conservative investors as they invest mostly in debt and take a little exposure to equity. The debt part can unlock value in the near term when the interest rates start falling. Also, the equity valuations are attractive for long-term investment," says Balasubramanian.
"MIPs could prove a win-win situation as prospects for both debt and equity look bright at this point," says Nevgi.
http://economictimes.indiatimes.com/markets/analysis/us-recession-avoid-investing-huge-amounts-as-stock-market-seen-nowhere-near-its-bottom-advise-experts/articleshow/9534750.cms
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