It's a kind of free fall in Equity Market. Nifty Index has lost almost 10% in last 30 Days. From 17475, it has lost almost 1667 points till date.
Sensex also fell from 58338 on 13th April 2022 to 52,930 on 12th May 2022 - almost a fall of 10% in 30 days ! As a long term investor, you may seek answer to following questions :
Question 1 : Why there is a sudden fall in the Equity Market ? Will it continue to fall more ?
Question 2 : Which are the funds/schemes, to opt for buying additional units?
Question 3 : Which are the funds/schemes to make immediate exit or changes ?
Question 4 : What should I do with my Systematic Withdrawal Plans. Will it get effected ?
Lets us find the answer on all these questions One by One :
Question 1 : Why there is a sudden fall in the Equity Market ? Will it continue to fall more ?
Answer : As you know Equity Market always shows early reaction to the news - whether its good or bad ! In the current scenario , INFLATION is the culprit. Across the world, every government pumped in huge money in the system to fight the COVID crisis, during FY 19-20 and FY 20-21. Of course such money was pumped in by way of subsidy, waivers, free ration etc. Hence FY 21-22 saw a very good upturn in the economy.
Generally, such pumping or liquidity is absorbed by way of more job creation or other consumption factors. However, it did not happen that way, across the Globe ! May be due to rise in Oil Prices and Metals prices due to Russia - Ukrain War situation and other factors. Hence Inflation kept climbing.
As a layman you can understand that government has a very simple and first measure to tame inflation - INCREASE THE INTEREST RATE to suck excess liquidity.
Last week, many economies across the world raised the interest rate - India, US, UK etc. Consequently , the increase in interest rate resulted in this sudden fall in Equity Market. Most importantly, when US raised their interest rate, most of the FIIs money started moving to US bonds or deposits ( for better Risk- Reward ratio)
Experts believe that this is not a permanent event - market has almost discounted this pain of Inflation. Market will soon settle down with rising interest rate scenario. However experts also predict that Dollor ($) may witness some more rise against rupee in days to come; so the road ahead may be little choppy. Still, frontline and Bluechip companies are now available at better rates and good valuation
Question 2 : Which are the funds/schemes, to opt for buying additional units?
Answer : Experts believe that Large Cap and Value stocks have taken more beating, and they are available at good discount. However, Small & Midcap must not be ignored at such a cheap price. Hence we have collected a list of category, which could be on your Top list for buying additional units or Fresh Units.
We have not mentioned any scheme name here, but request you to check your existing portfolio and do call us freely to make any additional purchases or fresh purchases in the schemes under these categories.
Important Note : Please note that the path to growth in any Equity Fund or related schemes, comes with an element of Volatility & Market Risk. So remain invested in your selected portfolio and keep adding units during patchy times for building better wealth
Question 3 : Which are the funds/schemes to make immediate exit or changes ?
Answer : This is not at all a good time to make any switches between Equity Funds. Yes, you may add on to some units in your folios related to any of the above Equity Category. If you are investing through SIP ( Systematic Investment Plan), then its best ! You may add some extra funds in your SIP folios for better cost averaging in the cost of your Units
Question 4 : What should I do with my Systematic Withdrawal Plans. Will it get effected ?
Answer : Retired investors who have chosen Dynamic Asset Allocation or Balanced Advantage Funds as their Annuity / SWP ( Systematic Withdrawal Plan) , should not worry at all ! As the funds will decrease their Debt allocation and increase their Equity allocation to take advantage of this situation. See the chart below, to understand the strength of Balanced Advantage Fund and how they dynamically manage the Debt & Equity ratio to keep your portfolio in positive return range :
Call at 930-7218766 or 0522-4101666/67 (Neetika, Pooja or Shweta) to get instant investment link for making additional purchases in your folios. Please note that, you can add as low as Rs 500/- in your existing folios - so do not hesitate or wait, just invest what ever is feasible in your savings
Disclaimer : This blog is just to motivate you to save more; this is in no way to be treated as any scheme recommendation by the author. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review their Risk profile carefully before investing in any scheme.