Free-Fall How to hang on when markets don’t

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Strict debt fund rules on anvilFIIs sell shares worth Rs 910 cr

: minimises the impact of risk during volatile periods.

Investors with little interest in equity can now go for liquid- and money-market mutual funds which give them annual returns anywhere in the range of 6% - 9%. There are some investors who bought scrips at higher market levels and are still holding on to them.

There are number of mid- and small-cap stocks with correction in the range from 30% - 50% with some having a correction of 50% or more. So, investors may have seen their portfolio value declining by around 40%. One should avoid selling at these levels, if there is no immediate requirement. If the investor is in need of funds, it is advisable to take a loan rather than liquidating his portfolio of which he will lose 40%, which is not a smart decision. Investors are better advised to take a personal loan which is available at 12% -15% interest rates and give time for their portfolios to grow. However stocks, with no track of good fundamentals and having been bought for short-term gains, could be liquidated on a case-to-case basis.

Lessons and markets ahead

The current market environment reflects a high risk-high reward kind of opportunity. Do not invest by taking loans from banks. If you have idle money, then it is best invest in this type of market. Don’t take exposure in futures and options if you do not have adequate knowledge. Build a portfolio like you make friends. Over a period, retain the good and helpful ones and discard bad or unused stocks. This requires complete dedication and comes only from a continuous tracking of a portfolio and its specific stocks.

If you want to invest now, make a wishlist of companies and the approximate price range you can afford to buy them at. This will open up a lot of opportunities at comparatively lower prices. If you wish to invest in stocks of you choice, then try to keep as much cash as you can in your account to buy the stock when it reaches the appropriate price point.