Skip to main content

Do not panic and sell in a volatile Stock Market

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 


Even for those who aver that volatility is an inherent part of stock markets, the recent stomach- churning gyrations have been a tad too much to handle. Those who gloated that they had decades of experience, suddenly appeared like novices. Media mavens desperately searched for 'experts' who could provide a few comforting words of wisdom, but unfortunately, the search for oracles proved fruitless.

While the latter half of August 2013 was a text book case of gloominess, the sun suddenly shone in September and today we are nearly back to where it all began. However, scores of shellshocked investors and speculators are suffering from Post- Traumatic- Stress Disorder (PSTD) in a figurative and financial sense.

Let us look at some of the steps one can take in such a scenario.

Diversify your portfolio within the same asset class:

Concentrated portfolios can offer outsized returns during good times, but can decimate wealth when the tide turns. For instance, the fall in the rupee meant that those who were overweight in interest rate sensitives like banking stocks or real estate stocks lost a lot, while those who purchased shares of export- oriented companies were beaming.

However, since we cannot know in advance as to which sector or stock will perform, the best strategy would be to diversify across different sectors.

Equity mutual funds could help you achieve that. Even in this current fall, several schemes fell less than the broad indices thereby sparing their investors a lot of heartburn.

Even in case of debt investments, while those overweight on income funds lost money, investors in short- term fixed deposits or ultra short- term debt funds benefitted from the spike in short- term rates. Diversification would have helped out here too.

Diversify across asset classes:

While equity investors were weeping, those in gold Exchange Traded Funds were beaming and investors in real estate were more or less neutral. Six months ago, investors in gold were losing heavily, while those in equity were gaining. In a nutshell, considered diversification across asset classes helps in protecting one's net worth, even though one may have to give up outsized gains at times.

There are no experts:

Do not base your investment decisions on the words of 'market - experts', as there are none. Many of these will only be able to explain why an event happened rather than predict what is going to happen.

'Rare' events are actually common:

Do not get unduly perturbed by various random events. Such events can, and do, occur quite frequently. The best way we can handle these is by matching our investments to our goals so that equity / real estate investments only go towards meeting long- term goals and debt investments cater to near- term goals.

Do not leverage: Leveraging drastically reduces your ability to hold on to investments during difficult times. Hence, it is wise to eschew it altogether.

What led to the fall

The current RBI Governor had used the words 'Perfect Storm' to describe the confluence of events which precipitated the 2008 crisis. The unholy trinity of the weak Indian Rupee, capital outflows and a weak macro- economic scenario led to our own perfect storm last month. Cause and effect mingled with one another, resulting in asnowballing slide. Also, Ben Bernanke's indication that the flow of money would be turned off gradually, led to a global sell- off across markets of all hues (stocks, bonds, commodities and forex) as they realised that the go-go days may be coming to an end.

FII Impact:

 The sad fact that Indian markets beholden to FIIs was once again brought into stark relief last month. But this time it was a doublewhammy as the stock and bond markets were subject to indiscriminate selling. In fact, bond markets fell first, as relatively recent FII debt investors stampeded towards the exit door. The stock market fell more as an afterthought, though it was no less severe.

Current Account Deficit:

India has yawning deficit which has always been funded either through debt or equity capital inflows. Whenever the appetite for emerging markets wanes, we face the hazard of a shortfall in such funding. Some of the ostensible 'capital - control' measures which were announced, also led to heightened fears among foreigners, and dampened sentiment.

The Rupee:

The fall in the rupee led to accelerated selling by FIIs whose dollar denominated returns were imperilled. Demand from importers added fuel to the fire.

In other words, whatever could go wrong, did go wrong. Indian mutual fund and equity investors were caught in the cross- fire and suffered as a result.

So what led to the revival?

Frankly, the causes are hard to fathom. Some attribute it to Raghuram Rajan's verbal abilities, others say it was due to short- covering, etc. The virtuous cycle fed itself, with a token amount of bottom- fishing by a few FIIs resulting in the rupee stabilising, which in turn led to further investments, as the catch- up rally gained pace. Today, we are back to nearly 6,000 on the NSE Nifty, a figure which was in the realm of fantasy just two weeks ago.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Stock Review: Havells

HAVELLS India's stock performance has been muted in the past three months, in line with the weak broader market. But, given the turnaround in its overseas subsidiary and the launch of new products in its consumer durable business, the company's stock may undergo a re-rating.    Havells is India's leading consumer electrical goods company, with consolidated sales of . 5,527 crore in the past four quarters. Its wholly-owned subsidiary Sylvania, which makes lighting and fixtures, has established brands in European, Latin American and Asian markets. Sylvania repre sented nearly half of the company's consolidated revenues in the first half of FY11.    Sylvania's poor financials hit Havells' consolidated performance in FY10. But, this has changed in the cur rent fiscal. Havells has reduced fixed costs of Sylvania by exiting from unprofitable businesses and outsourcing manufacturing to low-cost locations such as India and China. In the September 2010 quarter, Sylv...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

Health for Wealth - How to buy Health Insurance ?

Tax Saving Mutual Funds Online Current open Infra Bond Application form   HEALTH insurance is a relatively new phenomenon in India. Hence, it is not on the top of the mind for most people to make a conscious commitment towards health insurance. However, it is imperative for each one of us to plan for better health for our families and ourselves. There's no better way than to start with making health your top priority this year. So, your health insurance resolution charter would look something like: ■ Invest in health for wealth: Timely investment in health insurance can help build a security net and hedge sudden dilution of another financial asset class in the event of a health emergency, making it imperative to opt for a comprehensive health insurance plan. ■ Buy a comprehensive health cover that fu lfills your health needs for life: Buy a personal health insurance cover even if you have an employee cover because 'employer provided' health insuranc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now