New Delhi: It’s official, US stocks entered a bear market on Monday as the S&P 500 closed more than 21% below its all-time record, most recently reached in January 2022. According to S&P Global, a 20% decline in the S&P 500 to close from its previous peak is essential to define a bear market. The sell-off comes as concerns over high inflation, the war in Ukraine, Covid and the US Federal Reserve’s efforts to rein in the economy.
As a result, Indian stock markets also declined on Monday, while Rupee Has hit an all-time low as fears of aggressive interest rate hikes investors, Consumer inflation rose to a 40-year high of 8.6 per cent in the US in May, while India CPI inflation in May eased slightly to 7.04% from 7.79% in April, though it still remained within the RBI’s upper tolerance limit of 6%. More than. fifth consecutive month.
BSE s & P Sensex Falling 1,700 points to 52,553, while Nifty 50 broke below 15,700. continued strength of USD This week also the Indian rupee reached a record low of 78.28. Inflows of domestic institutional investors (DIIs) into the stock markets were the only silver lining, crossing the Rs 2 lakh crore mark in the current calendar year, with more than half a year to go.
“The record-high inflation numbers announced on Friday in the United States have led to a huge sell-off in global equity markets. Markets expect the US Fed to become more aggressive in tackling trapped inflation; this will lead to massive FII outflows. and further depreciation of FPI money INR, Monday’s fall is nothing new; This is just a reality check because most of the stock’s prices had moved too far from their fundamentals or intrinsic values. Markets often require trigger events to comply with the universal law of mean reversion and the Russo-Ukraine War is the event this time. Markets often get confused between risk and uncertainty, risk is a permanent loss of capital whereas uncertainty refers to situations with incomplete or unknown information. Uncertainty often leads to corrections and once it eases, the market returns to normal,” said Santosh Meena, Head of Research, Swastika Investmart.
In June 2012 USDINR level was at 55, in June 2017 it was at 64 and today it is at 78 which means that the rupee has depreciated by about 3.5 per year in the last decade. This has more to do with factors related to the strength of the dollar globally against several currencies. “The best way to deal with this is with some way to hedge your portfolio against currency risk. This can take the form of investing in assets whose base currency is the dollar. Commodities like gold and international equities contain some elements. Dollars. However, they come with their own risk and return profiles. An investor should try for a well-diversified portfolio with a suitable mix of different asset classes,” said Rishad Manekia, Founder, Kairos Capital.
So what should investors do?
no need to worry
Long-term investors need to look at the big picture and stay afloat. If the market is on its knees today, it will pick up again in the coming few days. As a long term investor it is best to do nothing as the wave continues to flow along both the up and down range. Additionally, it is an open window to buy more stocks for long-term investments as prices are on a downside.
While inflation is not going anywhere and will affect the profits of corporates in the near term, in the medium to long term, there are many companies with good fundamentals, strong financials and competitive advantage which are going to do well. “Furthermore, India is in a better position than its peers in terms of growth factors and ability to fight current inflation. Thus, the current uncertain times are best for adopting such quality stocks and investor dips on strategy. Can use purchase.” Meena.
Invest as much as you can after saving enough for the next 5 years
“a Share Market Crash is no good news for short-term marketers and it always bothers. The common reason for this is that the money involved in the market is actually the money taken as a loan or the entire asset is deposited. Brokerage Nirmal Bang said, “We do not recommend investing money in the stock market without saving enough for the next 5 years. Investing in the stock market indiscriminately is not good and will eventually lead to huge losses.” Are in stock today, make sure you have enough fuel left in case the money is taken. Invest some money in the stock market which is useless for you. So, even if the money has sunk yesterday, you are still running with a regular stream of income,” the brokerage said.
Find gems and buy more stocks in this period
When the market crashes, there will be stocks that will set new profit records 5-10 years from now and there will be stocks that will be wiped out during that period. “Investors should be able to distinguish one from the other and invest accordingly. Loss-making companies with leveraged balance sheets should have no place in a portfolio, no matter how attractive their valuations are. For quality companies, you should go ahead and pay them. Buying quality names on every dip and staying away from junk should be the mantra,” said Rahul Shah, co-head of research at Equitymaster .
Diversify Income Portfolio
Make sure you build enough wealth outside the stock market that can ensure a steady flow of money even when the stock market crashes. Diversifying an income portfolio can reduce the impact of a stock market crash. A steady flow of income ensures that you are financially stable even after a downturn in the stock market. Diversification helps ensure that your eggs are not concentrated in one type of asset basket. So if one stock or industry is having a bad day, your other investments can help offset those losses.
Review your asset allocation
An investor should first review their asset allocation. If equities have risen in the past one year, it is likely that the percentage allocation to equities overall has also gone up. Menakia said that regularly reviewing this mix and getting it back on target is a prudent and healthy way to keep the portfolio in shape over time.
Look at Macro Indicators
Investors should always consider macroeconomic factors when deciding whether to withdraw or retain their investments. “Currently, India is showing strong macroeconomic indicators. FDI is at an all-time high, GST collections are booming, which indicates strong positive market sentiment. Besides, infrastructure, IT and medical sectors are also doing well. All in all, it is a time to see and see the economy successfully fighting the temporary hurdles,” said Sameer Jain, Managing Partner, PSL Advocates & Solicitors.
According to Narendra Solanki, Head-Equity Research (Fundamentals), Anand Rathi Shares & Stock Brokers, investors should maintain their stocks which are performing and seek further clarity on the US Fed rate hike and its glide path for further action. wait for
Don’t stop your SIP
Falling equity markets help a long-term investor to use the SIP route to deposit more units with the same amount. You should continue with SIP in spite of stock market crash as it helps you to average out the purchase price of mutual fund units over time. Investing in equity mutual funds through SIP for long term will help you reduce the risk and volatility of the market to a great extent.
“While short-term financial prospects seem so volatile, long-term structural growth looks fully intact. This also makes it a great time for equity investors to start investing, as slow market trends call for it only because you are buying. There will be more units for the same amount. However, it is recommended that new investors should maintain a ratio of 65:35 between large and mid-caps for equity investments. Your large-cap investments will have some stability in your investment portfolio. While Bajaj Markets said in a note, “Your small and mid-cap investments may take some kicks to balance the volatile market trends.”
And, what should consumers do about the falling rupee?
If you have an expense coming up that is in USD, look at the nature of the expenditure. “High expenses for primary expenses such as overseas education or medical-travel are non-negotiable so cannot be avoided. However, if the expenses are of a discretionary nature such as a family vacation coming up, you may plan for a quarter or so. And check if the USD has cooled,” said Chaitali Dutta, wellness coach and founder of Azuke Personal Finance Advisory.
Family goals that involve spending in foreign currency – whether it is your children’s higher education or skill-upgradation for yourself – are recommended to be deposited in USD. “Currently, a resident Indian can open a global investment account, denominated in USD, sitting in India. Remittances to the self-investment account will be under LRS (Liberalized Remittance Scheme), which allows a resident to remit up to USD 250,000. Allows or it is equivalent per financial year. This pre-plan will ensure cost-averaging of USD and give you the opportunity of geographical diversification in your assets.”
What about hike in interest rates on loans by banks?
First, check your home loan agreement to see if you have a floating rate loan. If you do this, your EMI will increase as the banks fix their rates. However, if you have a fixed rate loan, your EMI will remain unchanged for the tenure of the loan.
“If you can afford it, try to prepay your home loan. This will reduce your overall interest. If you have any other debt such as a personal loan or credit card balance, take them off as soon as possible. Try to repay early. This will reduce your overall debt burden and make your EMIs easier to manage. Also, if you have a good repayment record, you can try to transfer your loan to a new lender. Also, be disciplined with your spending and try to save as much as you can. It will give you some buffer when EMIs become more expensive. By following these tips, you can You can mitigate the impact of RBI rate hike on your home loan EMIs,” said Atul Monga, Co-Founder and CEO, Basic Home Loans.
As a result, Indian stock markets also declined on Monday, while Rupee Has hit an all-time low as fears of aggressive interest rate hikes investors, Consumer inflation rose to a 40-year high of 8.6 per cent in the US in May, while India CPI inflation in May eased slightly to 7.04% from 7.79% in April, though it still remained within the RBI’s upper tolerance limit of 6%. More than. fifth consecutive month.
BSE s & P Sensex Falling 1,700 points to 52,553, while Nifty 50 broke below 15,700. continued strength of USD This week also the Indian rupee reached a record low of 78.28. Inflows of domestic institutional investors (DIIs) into the stock markets were the only silver lining, crossing the Rs 2 lakh crore mark in the current calendar year, with more than half a year to go.
“The record-high inflation numbers announced on Friday in the United States have led to a huge sell-off in global equity markets. Markets expect the US Fed to become more aggressive in tackling trapped inflation; this will lead to massive FII outflows. and further depreciation of FPI money INR, Monday’s fall is nothing new; This is just a reality check because most of the stock’s prices had moved too far from their fundamentals or intrinsic values. Markets often require trigger events to comply with the universal law of mean reversion and the Russo-Ukraine War is the event this time. Markets often get confused between risk and uncertainty, risk is a permanent loss of capital whereas uncertainty refers to situations with incomplete or unknown information. Uncertainty often leads to corrections and once it eases, the market returns to normal,” said Santosh Meena, Head of Research, Swastika Investmart.
In June 2012 USDINR level was at 55, in June 2017 it was at 64 and today it is at 78 which means that the rupee has depreciated by about 3.5 per year in the last decade. This has more to do with factors related to the strength of the dollar globally against several currencies. “The best way to deal with this is with some way to hedge your portfolio against currency risk. This can take the form of investing in assets whose base currency is the dollar. Commodities like gold and international equities contain some elements. Dollars. However, they come with their own risk and return profiles. An investor should try for a well-diversified portfolio with a suitable mix of different asset classes,” said Rishad Manekia, Founder, Kairos Capital.
So what should investors do?
no need to worry
Long-term investors need to look at the big picture and stay afloat. If the market is on its knees today, it will pick up again in the coming few days. As a long term investor it is best to do nothing as the wave continues to flow along both the up and down range. Additionally, it is an open window to buy more stocks for long-term investments as prices are on a downside.
While inflation is not going anywhere and will affect the profits of corporates in the near term, in the medium to long term, there are many companies with good fundamentals, strong financials and competitive advantage which are going to do well. “Furthermore, India is in a better position than its peers in terms of growth factors and ability to fight current inflation. Thus, the current uncertain times are best for adopting such quality stocks and investor dips on strategy. Can use purchase.” Meena.
Invest as much as you can after saving enough for the next 5 years
“a Share Market Crash is no good news for short-term marketers and it always bothers. The common reason for this is that the money involved in the market is actually the money taken as a loan or the entire asset is deposited. Brokerage Nirmal Bang said, “We do not recommend investing money in the stock market without saving enough for the next 5 years. Investing in the stock market indiscriminately is not good and will eventually lead to huge losses.” Are in stock today, make sure you have enough fuel left in case the money is taken. Invest some money in the stock market which is useless for you. So, even if the money has sunk yesterday, you are still running with a regular stream of income,” the brokerage said.
Find gems and buy more stocks in this period
When the market crashes, there will be stocks that will set new profit records 5-10 years from now and there will be stocks that will be wiped out during that period. “Investors should be able to distinguish one from the other and invest accordingly. Loss-making companies with leveraged balance sheets should have no place in a portfolio, no matter how attractive their valuations are. For quality companies, you should go ahead and pay them. Buying quality names on every dip and staying away from junk should be the mantra,” said Rahul Shah, co-head of research at Equitymaster .
Diversify Income Portfolio
Make sure you build enough wealth outside the stock market that can ensure a steady flow of money even when the stock market crashes. Diversifying an income portfolio can reduce the impact of a stock market crash. A steady flow of income ensures that you are financially stable even after a downturn in the stock market. Diversification helps ensure that your eggs are not concentrated in one type of asset basket. So if one stock or industry is having a bad day, your other investments can help offset those losses.
Review your asset allocation
An investor should first review their asset allocation. If equities have risen in the past one year, it is likely that the percentage allocation to equities overall has also gone up. Menakia said that regularly reviewing this mix and getting it back on target is a prudent and healthy way to keep the portfolio in shape over time.
Look at Macro Indicators
Investors should always consider macroeconomic factors when deciding whether to withdraw or retain their investments. “Currently, India is showing strong macroeconomic indicators. FDI is at an all-time high, GST collections are booming, which indicates strong positive market sentiment. Besides, infrastructure, IT and medical sectors are also doing well. All in all, it is a time to see and see the economy successfully fighting the temporary hurdles,” said Sameer Jain, Managing Partner, PSL Advocates & Solicitors.
According to Narendra Solanki, Head-Equity Research (Fundamentals), Anand Rathi Shares & Stock Brokers, investors should maintain their stocks which are performing and seek further clarity on the US Fed rate hike and its glide path for further action. wait for
Don’t stop your SIP
Falling equity markets help a long-term investor to use the SIP route to deposit more units with the same amount. You should continue with SIP in spite of stock market crash as it helps you to average out the purchase price of mutual fund units over time. Investing in equity mutual funds through SIP for long term will help you reduce the risk and volatility of the market to a great extent.
“While short-term financial prospects seem so volatile, long-term structural growth looks fully intact. This also makes it a great time for equity investors to start investing, as slow market trends call for it only because you are buying. There will be more units for the same amount. However, it is recommended that new investors should maintain a ratio of 65:35 between large and mid-caps for equity investments. Your large-cap investments will have some stability in your investment portfolio. While Bajaj Markets said in a note, “Your small and mid-cap investments may take some kicks to balance the volatile market trends.”
And, what should consumers do about the falling rupee?
If you have an expense coming up that is in USD, look at the nature of the expenditure. “High expenses for primary expenses such as overseas education or medical-travel are non-negotiable so cannot be avoided. However, if the expenses are of a discretionary nature such as a family vacation coming up, you may plan for a quarter or so. And check if the USD has cooled,” said Chaitali Dutta, wellness coach and founder of Azuke Personal Finance Advisory.
Family goals that involve spending in foreign currency – whether it is your children’s higher education or skill-upgradation for yourself – are recommended to be deposited in USD. “Currently, a resident Indian can open a global investment account, denominated in USD, sitting in India. Remittances to the self-investment account will be under LRS (Liberalized Remittance Scheme), which allows a resident to remit up to USD 250,000. Allows or it is equivalent per financial year. This pre-plan will ensure cost-averaging of USD and give you the opportunity of geographical diversification in your assets.”
What about hike in interest rates on loans by banks?
First, check your home loan agreement to see if you have a floating rate loan. If you do this, your EMI will increase as the banks fix their rates. However, if you have a fixed rate loan, your EMI will remain unchanged for the tenure of the loan.
“If you can afford it, try to prepay your home loan. This will reduce your overall interest. If you have any other debt such as a personal loan or credit card balance, take them off as soon as possible. Try to repay early. This will reduce your overall debt burden and make your EMIs easier to manage. Also, if you have a good repayment record, you can try to transfer your loan to a new lender. Also, be disciplined with your spending and try to save as much as you can. It will give you some buffer when EMIs become more expensive. By following these tips, you can You can mitigate the impact of RBI rate hike on your home loan EMIs,” said Atul Monga, Co-Founder and CEO, Basic Home Loans.