Global equity markets, including Indian stocks, are in the grip of sell-off after the outbreak of the Russo-Ukraine war. In YTD time, the BSE Sensex and NSE Nifty have fallen up to 8 per cent, while the S&P mid-cap index has corrected around 10.25 per cent over the period. In year-over-year timescale, the S&P Small-Cap Index has fallen nearly 14 percent. Hence, buying a stock in the current market seems a bit difficult as a small mistake can lead to huge losses in the near future.
How to buy stocks and build yours stock portfolio In the current volatile market, Aanchal Kansal, Research Analyst at Green Portfolio, a SEBI registered portfolio management services provider firm, said, “Any portfolio created by an investor should be compatible with their goals. Above all, a resilient portfolio will be fundamentally sound. Companies. Companies with low debt, high-end management and strong margins are some of the important characteristics that an investor should look for while choosing a stock in the current volatile market.”
‘Cycles are inevitable, and interest rate hikes are unreasonable. During such volatile times, investors should build their portfolios slowly and take advantage of mis-pricing and over-reaction. Exogenous factors will give short-term returns, but as an investor, a portfolio is designed to be long-term. And in the long run, what matters is only the fundamentals of the company and the associated cash flows,” said Aanchal Kansal of Green Portfolios.
give situational advice stock market investor To convert this challenge into an opportunity, Puneet Patni, Equity Research Analyst, Swastik Investmart said, “The current volatile market is one of the best times to invest and investors can deploy the fund in a phased manner i.e. lump sum investment. Should be avoided. Recent sell-offs have made valuations of quality companies and rising stocks fair. We suggest investors use this opportunity to embrace companies with sound fundamentals, strong financials and competitive advantage.”
Puneet Patni, Swastika Investmart said that investors can follow some of the mentioned pointers to build a portfolio in the current times:
1]Buy for the long term;
2]Investors should do due diligence before investing and invest in stocks where they have a thorough understanding of the underlying fundamentals;
3]Diversification is essential, although too much can reduce overall returns;
4]Understand the risks while choosing small-cap, mid-cap and large-cap stocks; And
5]Debt-free companies that have fallen lower than their peers are expected to rebound at a faster rate once the market stabilizes.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.