Not sure about your next move amid market volatility? 8 experts suggest investment strategies for long term

Indian stock market benchmarks, the Sensex and the Nifty 50, experienced a significant recovery on Tuesday, rebounding over 1 percent each in intra-day deals as global markets rallied. This recovery followed a sharp decline of 3 percent the previous day, triggered by global concerns over a potential U.S. recession due to weaker-than-expected July payroll data.

While experts remain optimistic about the Indian market’s long-term prospects, they believe that yesterday’s crash was much needed due to expensive valuations of the Indian market.

The Sensex had closed at 78,759.40, down 2.74 percent, and the Nifty 50 ended at 24,055.60, down 2.68 percent in the previous session. However, on August 6, the Sensex soared by 1,092.68 points, or 1.38 percent, reaching an intraday high of 79,852.08, while the Nifty rallied by 327 points, or 1.35 percent, to a day’s high of 24,382.60.

So what should investors do amid this volatility? Should they brace for a bear run or will the markets continue their upward trend? Here’s what experts suggest.

Dhiraj Relli, MD & CEO at HDFC Securities

Relli highlighted that while the Indian markets have not experienced a significant correction since mid-2022, the recent crash might have been necessary given the high valuations. He advised caution, recommending that traders look for small upsides with stop losses while they wait for some stability. Meanwhile, risk-averse investors should consider lightening their portfolios and holding cash for better entry points.

“While the macro numbers seem to be ok till now, the early Q1 results are a mixed bag with companies struggling to grow topline and/or maintain margins. Rural resurgence is awaited. Lenders are seeing pressure on asset quality after a gap of a few quarters. Though India is relatively insulated from the world, it could still get impacted if the global risk appetite is negatively impacted affecting the FPI flows and India’s exports could get hurt. The outcome of the US presidential elections (Nov 2024) and India state elections (Oct 2024) are some other triggers to watch out for,” said the expert.

Meena noted that in the previous session, Indian markets witnessed signs of the first meaningful correction in global markets after an extended bull run. Investors and traders should be cautious and avoid rushing in immediately, as better entry levels may emerge. The outlook for market remains very bullish, but the potential for a significant correction means investors should consider taking profits where valuation concerns exist, he advised.

Ajit Mishra – SVP, Research, Religare Broking Ltd.

Mishra believes investors shouldn’t be concerned about short-term fluctuations. Instead, they should use these corrections as opportunities to add quality stocks at lower prices. For new investments, priority should be given to sectors or themes that are focused on the domestic market, he added.

Rupak De, Senior Technical Analyst, LKP Securities

De suggested that investors should exit long positions if your stop loss is triggered for short-term traders. For long-term investors, India is a buy-on-dips market for the next 10 years.

Rajesh Bhosale, Technical Analyst, Angel One

Bhosale pointed out that the market has experienced a relentless bull run over the past few months, making yesterday’s correction much anticipated. Currently, the momentum is firmly in the hands of the bears, and it appears challenging for the bulls to stage a similar comeback as seen recently. Therefore, it is advisable to avoid trying to catch an immediate bottom. Instead, consider lightening positions on any bounce. Investors may look to accumulate marquee names in a staggered manner near the strong support levels of 23,300 to 23,200.

Vinit Sambre, Head – Equities at DSP Mutual Fund

Sambre emphasised that despite recent volatility, the fundamentals remain strong. Growth is being supported by government capital expenditure and a likely revival in consumption, bolstered by good monsoons and an improving rural outlook. Additionally, corporate balance sheets are not heavily leveraged, making them less susceptible to external risks. Banks’ balance sheets are also in good shape, with low levels of non-performing assets (NPAs).

Historically, periods of volatility have provided opportunities for investors to realign their asset allocation. If the valuations become more reasonable, this current period of market turbulence can be used strategically to consider raising exposure to equities gradually with 5-7 years view. Despite the current uncertainties, the long-term outlook remains constructive due to strong fundamentals, government initiatives, and a stable banking sector, said the expert.

Tanvi Kanchan, Head – UAE Business & Strategy, Anand Rathi Shares and Stock Brokers

Kanchan viewed yesterday’s sell-off as a short-term volatility by way of profit booking and is no indicator of any long term panic mode set in the Indian equities. For investors looking at entering the equity market, a staggered entry during volatile periods can be considered, she recommended.

Divam Sharma, Founder and Fund Manager at Green Portfolio

Sharma noted that there are no fundamental issues with the Indian markets or the Indian economy. He attributed the recent market decline to global factors, such as Japan’s interest rate hike, rather than domestic issues. He remains optimistic about a quick recovery for the Indian markets. There’s no bear run in sight for us, he said.

The recent market volatility underscores the importance of careful investment strategies and the need for a balanced approach. While short-term fluctuations are inevitable, the long-term outlook for the Indian stock market remains positive. Investors are advised to use this period to reassess their portfolios and consider strategic investments based on market fundamentals and expert recommendations.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.