With the clouds of war in the Middle East disappearing, the Indian stock market has once again returned to its glory. The recovery in market indices has brought a smile on the faces of investors, but has also created a big dilemma in their minds. At this time, only one question is flashing in the mind of every small and big investor, is this the right time to invest money in the market? Should one invest a large amount in lump sum to earn profits or would it be safer to move gradually through a Systematic Transfer Plan (STP)?
Seeing this rise in the market, investors often make the mistake of making big investments all at once due to emotions. Market expert Mihir Bora believes that if you have a vision to remain in the market for the next 3 to 5 years, then this is a great level to start investing. In fact, necessary corrections have taken place in the market on all three fronts: price, time and currency. There is an old rule of the market that when there is an atmosphere of despair all around, that time is the golden opportunity to make money.
However, experts clearly advise that instead of investing all your money at once, invest in chunks over the next one to two months. If you are not able to decide where to invest your money, then flexi cap or multicap funds can prove to be a safe and balanced option for you. At the same time, expert Jaspreet Singh suggests that investors who can take a little more risk (aggressive investors), should invest their money in the next 2 to 4 weeks. In contrast, conservative investors should gradually put their money into the market over a period of 2 to 4 months.
There is still a kind of instability in the market. In such an environment, Sunil Subramaniam has suggested a very effective formula of 'Daily STP' for investors. His advice is that investors should first deposit their lump sum amount in a safe liquid or arbitrage fund. After this, set daily STP in equity from that fund for the next 45 days. The biggest advantage of this strategy is that by investing daily, you get direct benefit from the daily fluctuations of the market and the average value of your investment becomes much better. This method helps in increasing returns while reducing risk.
After knowing the right way to invest, the next big question comes in which sectors the money should be invested. For aggressive investors, Sunil Subramaniam has given a clear allocation, allocate 50 percent of your investment to the banking sector, 25 percent to consumption and the remaining 25 percent to infrastructure funds.
On the other hand, Mihir Bora is very optimistic about the capital goods sector. He believes that the entire focus of the government is currently on infrastructure and power sector, due to which tremendous growth will be seen here in the long term. However, there may be some slowdown in the automobile sector for some time. For investors who like to take moderate risk, multi asset allocation funds would be ideal as they provide exposure to equities as well as precious metals like gold and silver.
Even though international tensions may have subsided, investors should keep their eyes wide open. Experts have warned that stopping the war does not mean that economic threats have been averted. According to Jaspreet Singh, the rising prices of diesel and gas will have a direct impact on the profits (margins) of the companies. Apart from this, the inflation rate may also increase from 2 percent to 4 percent in the coming time, which is a matter of concern. Therefore, now the movement of the market will not be determined only by the current quarterly results of the companies, but will also depend on what kind of 'guidance' or projections they present for the future.
