The sharp correction in the markets following the escalating Iran-Israel clash presents a prime opportunity for long-term investors to buy quality stocks at lower prices. They should not panic as markets have historically shown resilience during such geopolitical conflicts and recover within a week.
Lower valuations for quality stocks often emerge during market downturns, creating a favourable entry point for those who believe in the company’s long-term prospects. Also, dividend-paying stocks can become more attractive as their yields increase relative to the overall market.
Investors should avoid impulsive decisions based on short-term fluctuations. “The current market conditions could offer a favourable environment for investors seeking to build a strong portfolio,” says Sonam Srivastava, founder, Wright Research.
As overvalued stocks with high price-to-earnings ratio correct to more reasonable levels, investors with cash reserves can buy at attractive prices. “When the market stabilises, the new investments have the potential for significant gains,” says Swapnil Aggarwal, director, VSRK Capital.
Midcaps and small caps have led the recent bull run and are now showing signs of a pullback. “Large caps with a long-term outlook could be a more prudent option now,” says Anirudh Garg, partner, Invasset PMS.
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