Here's How You Should Invest In Uncertain Market

In a current volatile market, it is ideal to have a strategy in place that can help you steer through the uncertainty in investments

New Delhi: In the wake of the global Covid 19 pandemic, Indian markets have remained largely unstable due to slowdown in the global markets leaving investors jittery about their next move. After the news of Covid 19 started surfacing, Indian markets have responded to the global cues with Sensex and Nifty fluctuating on a daily basis. While the number of positive Covid 19 cases spiked in the US, Italy and Spain witnessed a steady fall in the number of deaths and critical cases. The changing statistics have triggered gains and losses. Even though the Indian curve depicting an increase in the cases remains steeper compared to the Asian peers, it is still uncertain how the curve will fare in the coming days. Apart from these factors, the unsuccessful oil deal between Saudi Arabia and Russia, have put investors in a tight spot and most of them are not sure about the next step in the market. In a current market situation, it is ideal to have a strategy in place that can help you steer through the uncertainty. Here is how you can steer through uncertain markets Hold on: Ideally investors just hold on to their investments when the markets are down but those looking to invest are most likely trying to time the market and waiting for it to recover. If you go by the data then the market capitalization of around 27 companies in the BSE 500 index, has seen a dip of Rs 20,000 crore according to reports. At this time an investor can choose to remain afraid of making losses or take a pause and hold the socks rather than just investing in stocks without due diligence. Go slow: In case you have surplus cash and looking to invest then, don’t invest at one go rather spread the money in a staggered manner because the valuations may seem attractive now. You should ideally spread the investment in the coming two quarters as the markets is likely to witness more dips before the economy is back on track. If you have a long term goal of around four-five years then it is better you start investing now at the time of lockdown. However, experts opine that if it gets extended then it can lead to volatility in stocks causing the market to crash further. Stick to your goals: If a have a long term goal such as retirement then ideally there is no need to worry about the short term behaviour of the market. But in case of short term goals, it is better to avoid large exposure to equity and rather invest in fixed income products. This will keep the portfolio unaffected in case of volatility in equity and help you steer through the highs and lows in the market. Diversify portfolio: Another important aspect of the portfolio is diversification across financial assets. It means that your portfolio should have exposure to equity, debt and physical assets like gold. A well-diversified investment gives cushion to the portfolio incase any of the asset classes are drawn down due to the negative outlook. It may happen that equity is giving negative returns but in the same period, gold and debt may perform well offering a breather to investors. Rebalancing is a key: Rebalancing helps to keep the risks as bay for instance if you have brought down the allocation in equity by the dip in the market but didn’t take any step to restore it then the returns in the overall portfolio may not seem good because it may have lesser exposure to equity now. This will directly impact your goals because of lower corpus. You may also opt for a switch between mutual fund scheme categories. For instance a hybrid fund that primarily invests in two or more asset classes can be a safe bet to ensure a rebalanced portfolio. However, asset allocation may not show the investor’s preferred allocation.