An almost 8% fall in both indices has made most equity investors worried. Let us find out what caused the sharp decline and Why the market crashed? There are various reasons which have been attached to justify the fall which include rich valuations, elevated inflation, the rate hikes sensation, and majorly the comeback of Covid-19 cases in the different parts of the Globe, blown to the market sentiment.
The sharply rich rally of the Indian market has valued the Indian equities as expensive and unsustainable. Wherein many domestic and global financial firms have been quite critical about the premium valuation of Indian equities. The very famous Bloomberg reported BlackRock Inc., a global investment management firm, is disinvesting from Indian equities as it is finding China and its valuation attractively more optimistic than the Indian market. Experts believe the positivity of top global firms for China has induced selling by foreign portfolio investors.
The resurfacing of Covid has scared the investors and this nervousness has led to liquifying for the daily needs and consumption at the time of lockdowns. On the other hand, hardening inflation has started to make central banks uncomfortable and they may announce a change in stance in the coming policy meet.
Though the market seems to be volatile in the short term, experts say the fall will not be more than 8-9% and the market will bounce back soon. But as the new variant-Covid cases have begun to rise in India, we can see a fall of around 10%. MyFinopedia & its experts are recommending Balanced Advantage Funds or Dynamic Asset Allocation funds to new equity mutual fund investors at this juncture. They focus on awaking the investor for continuing their SIPs keeping valuation in sight.
A moderate investor is suggested to invest in Flexi cap funds. And in case, they want diversity to reduce overall risk, one is advised to invest in a large-cap fund. The investment in a large & mid-cap fund or a small-cap fund may bring upon a little higher risk.
Any investor’s weirdest dilemma is to know what’s the right time of investing especially when it comes to equities. To sort out investors’ concerns, search for emerging investment trends and preferences of young investors. The Ace investors and market experts do share insights on Dos and Don’t for retail investors in current market scenarios emphasizing change in strategies for equity investment.
“One should always continue with SIPs but without losing the sense of valuation. One can start with add-on investments when the market is in the correction mode.