The market is quite volatile these days. Analysts expect the markets to remain volatile in the short to medium terms as more news comes in from the global markets.
Here are some tips for investors:
A) For short-term investors
Investors looking at short term investments should be careful and track market developments closely. You should keep a watch on market movements and maintain a tight 'cut loss' and 'book profit' level for open positions. Since the markets are quite volatile, overnight open positions could be very dangerous. Often, small investors fall into a trap due to their relatively low corpus.
Short-term traders should remain in constant touch with the markets. In volatile conditions, markets provide a lot of trading opportunities for short-term traders in day-to-day trade. However, it is not very easy for the small investors to use those opportunities.
Brokerage cost in short term investments often reduces or eliminates the profit potential for small investors. On the other hand, a large investment bank or institution faces very low transaction costs (small brokerage fee etc) and therefore can make use of small opportunities as well.
B) For medium and long-term investors
The macroeconomic and global scenario is changing quite frequently. It is very important for medium and long-term investors to analyse the market and business situations, and identify a set of stocks to invest in. One way to identify the right stocks is sector analysis. For example, the market is segmented in around eight sectors. Investors can study and make an assessment of the impact of the current market situation on these sectors. There are some sectors that are favourably placed, some are neutrally placed and others negatively placed. You can pick up some blue-chip stocks from favourably placed sectors.
Small investors should try to invest in large-cap (index companies) and large mid-cap companies only. There is a lot of information available on large-cap stocks.
Investors who entered at lower levels should look at selling partially and booking some profits as the markets have gone up. Similarly, investors stuck in non-performing stocks can look at exiting from their positions and investing in better-performing stocks.
Since the markets are quite volatile with a negative bias, it is important to accumulate in small quantities. Investors should buy or sell in small lots so that they can get a good average entry (or exit) point.
Since investments in market instruments come with a risk of loss, investors with a low risk appetite should either stay away from stocks or invest through the equity mutual fund route. Investors should always invest their risk capital only in the markets. Investor should never borrow and invest in the markets just because the valuation of certain stocks is looking attractive.
Here are some tips for investors:
A) For short-term investors
Investors looking at short term investments should be careful and track market developments closely. You should keep a watch on market movements and maintain a tight 'cut loss' and 'book profit' level for open positions. Since the markets are quite volatile, overnight open positions could be very dangerous. Often, small investors fall into a trap due to their relatively low corpus.
Short-term traders should remain in constant touch with the markets. In volatile conditions, markets provide a lot of trading opportunities for short-term traders in day-to-day trade. However, it is not very easy for the small investors to use those opportunities.
Brokerage cost in short term investments often reduces or eliminates the profit potential for small investors. On the other hand, a large investment bank or institution faces very low transaction costs (small brokerage fee etc) and therefore can make use of small opportunities as well.
B) For medium and long-term investors
The macroeconomic and global scenario is changing quite frequently. It is very important for medium and long-term investors to analyse the market and business situations, and identify a set of stocks to invest in. One way to identify the right stocks is sector analysis. For example, the market is segmented in around eight sectors. Investors can study and make an assessment of the impact of the current market situation on these sectors. There are some sectors that are favourably placed, some are neutrally placed and others negatively placed. You can pick up some blue-chip stocks from favourably placed sectors.
Small investors should try to invest in large-cap (index companies) and large mid-cap companies only. There is a lot of information available on large-cap stocks.
Investors who entered at lower levels should look at selling partially and booking some profits as the markets have gone up. Similarly, investors stuck in non-performing stocks can look at exiting from their positions and investing in better-performing stocks.
Since the markets are quite volatile with a negative bias, it is important to accumulate in small quantities. Investors should buy or sell in small lots so that they can get a good average entry (or exit) point.
Since investments in market instruments come with a risk of loss, investors with a low risk appetite should either stay away from stocks or invest through the equity mutual fund route. Investors should always invest their risk capital only in the markets. Investor should never borrow and invest in the markets just because the valuation of certain stocks is looking attractive.
