What Should You Do?
Uncertainty is the only certainty in the stock market. Do not let anyone tell you otherwise. The Nifty50 index has corrected 14% since its October high levels but recovered 9% thereafter. If you invested when the market was correcting, you would have made gains in the recovery phase. Amid conflicting and volatile markets, invest in quality companies, essentially blue-chips. Blue-chip refers to well-recognised and stable companies, like Reliance Industries, Hindustan Unilever, UltraTech Cement, Asian Paints etc. The strategy is not to panic and remain invested in blue chips. Think of a directionless market as an opportunity.
The current scenario has made policymakers and market experts clueless because several factors are playing at a global level – Ukraine-Russia war, inflation and crude oil price rise. The problem is that demand is rising post-COVID era, and inflation is also high. This time it’s not just India but the entire world grappling with macroeconomic challenges.
How Deep Can The Markets Dive?
History repeats itself but so do the after-effects. In the past, several US recessions have indicated that the markets always deliver positive returns after six months. What we are facing currently are inflation and low purchasing power. Amidst these challenges, one sector is doing better than others, i.e. technology stocks. Since February lows, the Nifty IT index has risen 13%. So, we haven’t reached the bottom yet. In ongoing macro headwinds and geopolitical tensions, the market will likely walk the narrow path. This will also affect the earnings of India Inc.
What Lies Ahead?
One must be patient and disciplined to make gains in the stock market. Look out for solid companies that are correcting and adding funds systematically. Big companies do not budge that easily, even if the market is highly volatile. To determine the path from hereon is impossible. We will have to wait for some happy news on the Ukraine-Russia war front.
