On the global front, the US central bank has already said that it will end its easy money policy by March and raise interest rates at least three times before the end of 2022 – both thanks to the furious inflation rate, which is at an all-time high of more than three decades. Then there is the possibility of the recent Omicron version of the coronavirus forcing countries to opt for lockdowns again, impacting markets and economies.
On the domestic front, as a result of US decisions, foreign funds may accelerate selling of Indian stocks, which could weaken Rupee, Rising inflation, WPI over 14% and food prices Showing an increasing trend, it could affect the bond as well as the stock markets. “2022 may be a year of consolidation, but will still be a good year for equities. But the volatility could be greater than what we experienced in 2021,” said Hiren Veda, CEO, director and CIO of Alchemy Capital Management.
So what should investors do? Investment advisors feel that in uncertain times when volatility can be high, investors should and should not panic. “This is a period that demands flexibility, as investments in equity markets tend to be of longer duration. It is important that investors remember their long-term investment goals instead of giving in to panic, said Dhruv Mehta, President, Foundation of Independent Financial Advisors (FIFA). “While market volatility and uncertain times are natural for a short period, the bigger picture needs to remain long-term savings.”
This big picture is probably a structural one Bull market in India. “Indian markets have again entered a structural bull phase – supported by strong macro, solid earnings growth and strong exports,” Ved said.
On the question of where to invest, Ved thinks the internet, and new age businesses and entrepreneurs, could fuel the next leg of the rally in a few years. “But the failure rate (in the Internet business sector) can be very high. So, investors have to be very selective, patient and careful.”
Mehta feels that market dynamics are always changing, but any temporary downturn should not affect one’s long-term financial plans. Also, it is advisable not to read aggressively on expert opinions and negative insights on the market, which will only lead to chaos and confusion. Seeking the guidance of a mutual fund distributor – who will handle one over the period and provide rational and sound financial advice – will help investors see the bigger picture, stay calm and focus on their financial plans and goals, even if the current whatever the market is. situation, he said.
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