Thirteen years ago, we faced a financial crisis when the market hit rock bottom. Two years into the pandemic, we are in a similar situation hoping for markets to become steady. Seasoned investors know ‘this is the time’ to buy, while others are busy counting their eggs. Now the question arises, should you buy the dip? Well, it depends on how you approach the market. Some wait for more fall while others start buying as they see the market spiralling down. Market volatility doesn’t last forever. That’s why investment advisers ask long-term investors to buy ‘now’.
Most of you might ask – why has the market become so volatile? There are plenty of reasons including inflation, the Ukraine-Russia war and investors themselves. Yes, problems also arise when investors come to the market with a short-term approach and use it as a money-making device. They come with hopes of making quick money, and in times of market volatility, they get scared and exit with losses. And this further compounds the market volatility.
Investors should approach the market with the intent of investing in a company. It makes things easier. So whenever the market spirals down, every day becomes an opportunity for the investor to buy the dip. For instance, people who invested in March 2020 doubled their money in 16 months.
Should You Buy The Dip?
Yes, you can. When foreign funds are exiting, locals stay put in Indian equities. The healthy trajectory of corporate earnings, RBI’s stance and government’s efforts look promising to the investor community. Sanctions on Russia and shifting manufacturing hubs from China have shifted the limelight to India. The optimism in India’s growth story is riding the wave.
What Lies Ahead?
It’s best to invest money while you can. The market will continue to fluctuate until the situation eases in Ukraine. The Fed rate hike will have a temporary effect on Sensex and Nifty50. It’s best to take this as an opportunity to utilise the capital in stocks.
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-Team Teji Mandi