Tough time never lasts, but tough people do. – Robert H. Schuller
This is an unprecedented time that brings with it profound uncertainties. Decision making during such time gets tricky, especially if you are a new investor. Investors look for cues that will point them in the right direction and help them make a substantial profit. Many experts suggest that when the market goes through frequent changes in sentiment at times like this, one’s stock market investment strategy should be simple to fetch predictable returns.
Investors Retreat As The Second Wave Hits India
India struggles with the second wave started when COVID infection began to climb up post the systematic unlocking undertaken by the Government. As a result, many parts of the nation came under its grip and tallies spiked.
To curb numbers, local governments had to impose lockdowns in many states disrupting the economic recovery.
There is no denying that the second wave has delayed the country’s economic recovery process. Consensus estimates suggest that India’s GDP growth rate is likely to dampen to 8 percent. Before the second wave, the market expectation was pegged at 11 percent, and NIFTY EPS were expected to grow above 30 percent.
The Line Of Silver
The global markets are slightly recovering as many countries have joined the vaccination drive. It is widely acknowledged that vaccines will win the war against the ongoing pandemic, and the economy will turn around. In a recent interview, Dr Anthony Fauci, immunologist and advisor to seven US Presidents, commented on the current situation, “This is not going to last forever. Scaling up the vaccination is the only solution.” Indeed, his words carry a lot of weight. The virus must have made a dent in the progress of human society, but the end seems close.
What Is The Best Investment Strategy Then?
The COVID-19 situation in India has been improving but we still have a long way to go. However, experts say the best is to stay invested, even when the market is choppy. The global market is turning around, and a vaccine powered recovery process is already underway in the US, China, Europe, and other countries. As vaccine drive intensifies, the US is expected to grow at 6 percent post-COVID. China’s growth is pegged at 9 percent, and Europe is likely to achieve 6 percent with the normalisation of the economy.
On the other hand, India’s GDP growth may slow to 8 percent with the recent surge in COVID cases. In this challenging time, the best policy is to safeguard your money by keeping your investment strategy simple.
The global market appears to be resilient and on the path of recovery. And high liquidity and low rate of interest mean good investment opportunities for investors. Hence, it makes sense to remain invested. However, since the condition remains uncertain, there would be fluctuations in the market. If you are heavily invested in stocks, it is good to review your stock market trading strategies and shift some profit to low-risk investments, like FD, even when the returns remain low. Secondly, move funds to the blue-chip company shares.
The top 20 companies in India generate about 80 percent of corporate earnings from financial services, IT, oil & gas, FMCG and capital goods. However, since the valuation is high, one can select quality companies from mid-cap and small-cap segments with the potential to grow in the current situation. But it is not easy to choose potential companies in the above categories. To avoid the hassle, beginner investors can select to invest through mutual funds SIPs.
Profit opportunities exist in every market situation, but the key is to select the best strategy according to market conditions. It is always best to keep share market investment strategy straightforward and long-term, with moderate risk exposure in situations like this.
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