The concept of auspicious time is not only considered for performing rituals but also for investments. The concept is nothing new, but a very old concept that has been followed till date. In stock markets, we have an auspicious time to invest in equity market for healthy returns over a period of time called as Muhurat Trading.
Indian equity markets have encountered a massive correction this year till date. A double digit correction from record high hit in August has taken out many investors out of this market. For some, it resulted in sleepless nights as portfolios were completely thrashed into the red zone from the green zone in just a span of a few months. Benchmark indices were pushed below the crucial support levels in the last two months. Every time, a new low was made; we have this concept that now the bottom is done and an upside is soon to begin. But at the current juncture, it looks like we have hit a bottom at 10000 on the Nifty, and the only way for market to go is UP.
Markets remained highly volatile for both equity and debt market across the world in 2018 till date. The high volatility was primarily on account of a looming trade war between the U.S. and China coupled with a change in interest rate policy across major central banks in developed countries. Indian equity market fell about 10% from its peak while many stocks eroded wealth by more than 50% in some cases. The current conditions in markets are ideal for investors to reshuffle their portfolio and what could be a better time to change the allocation than Diwali. Volatility will prevail in the markets for an extended period; investors looking forward to build a portfolio should approach with caution and use the bottom-up strategy for the allocation.
At an aggregate level, mostly large caps offer a better risk-return profile; however, at some occasions individual stock among small and mid-caps look better. The long term strategy to stay in the game of investment is to always look for companies with strong business model. Quality matters in the long term that can stand against all volatility. With elections due in 2019, highly volatile sessions will occur. Sensex is targeted to touch the mark of 45000 by the end of the year 2019.
Our recommendation is to construct your portfolio with an allocation to varied asset classes based on investment objective and risk appetite in consideration. You should always stick to your asset allocation plan and if you have more funds to invest, do so in the same pattern; so if equity has fallen, you should invest more in equity to maintain asset allocation ratios.
For example, If you have ₹ 100000 in hand and you are in the age bracket of 30-40 years, a reshuffle can be looked at after the recent fall in markets. For long-term investors, the following should be practiced: