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Some tips for individual investors for investment planning

These days, the stock markets are quite volatile in nature with a bearish bias. Rallies do not last long in the markets and peaks of market rallies are reducing. The markets are hitting fresh lows in every fall. Many blue chip stocks are trading 50 percent lower than their high levels. Many stocks are currently trading at their year's low prices or all-time low prices. Many investors have lost their hard-earned money and many others are stuck with stocks that have corrected heavily in the last few weeks.

Here are some tips for investors already invested in the stock markets:

1) Hold fundamentally strong options

The domestic macroeconomic fundamentals are strong. The GDP growth rate is expected to slow down slightly from the nine percent last year to around 7 - 7.5 percent this year. This is still quite good and encouraging in comparison to other developed countries. The current market crash can be attributed largely to foreign institutional investors' (FIIs) outflows but FIIs will come back once the global financial turmoil settles down. Therefore, investors who are invested in blue chip or fundamentally strong mid-caps should hold on to their positions.

2) Go for value picks

The current market fall is quite steep and many investors (especially small investors) did not have the time to exit from their positions. Market sentiments are quite bearish at the moment and a further fall from current levels cannot be ruled out. Market traders and analysts are expecting more negative news coming from the global as well as local macroeconomic front. Investors with a high risk appetite can look at accumulating fundamentally-strong stocks at current levels.

3) Switch sectors

Currently, the markets are looking oversold after the recent corrections. There could be some bounce back in the days to come. Investors stuck in fundamentally-weak stocks should look at switching their positions to fundamentally strong stocks and sectors.


Here are some tips for investors looking at making fresh investments in the stock markets:

  • Study stock and price

First of all, it is important to identify the stocks that have fundamental value at current prices. Investing in a stock at right price differentiates between a bad investment, good investment and a great investment.

  • Research stocks

The stock market requires constant study and investigation. Finding a good stock at the right price is not a onetime exercise. It is a continuous process. Active investors in stock markets should always monitor their invested stocks and other stocks with potential to invest in.

  • Systematic investing

Currently, the markets are going through a bearish phase. Investors should be extra careful while making investments in a bearish phase. It is advisable to accumulate stocks by investing your funds in small lots. In a bearish market phase, even fundamentally-good stocks correct heavily at times. Therefore, it is very important to have patience and not panic in these conditions.

  • Liquidity

Liquidity and having a cash position is the key to success in a bearish market phase. Investors should start investing in identified strong stocks and continue to accumulate them on further corrections.

  • Analyse risk appetite

Investors should only invest their risk capital in the stock markets. Also, investors should always have a long-term horizon while investing in the stock markets (more than one year at least). Investors should never borrow to invest in the markets.

  • Avoid penny stocks


Investors should stay away from investing in penny stocks. Usually, there is very little information available and also these stocks do not have enough liquidity in the market. As a result, investors get trapped in these penny stocks and lose their capital, and any further opportunity during a correction phase.

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