Tuesday, 2 September 2014

Best Investment Approaches During Market Rally

Posted by MyInvestmentsPub
Sensex crossed 27000...Nifty crossed 8000.... Small investors have been hearing these kind of news from the last couple of months. Many retail small investors are trying to step towards Stock Market again. But, is it the right time to enter Market? What is the approach to be followed for existing Investors? Shall we sell or buy the stocks at this moment? Many questions are roaming around these small investors. We will see the approaches to be followed for Small investors during bull run of Markets in this article...


Sensex and Nifty are Zooming:


Recently Nifty crossed the 8000 mark and zooming towards 10000. Sensex already crossed 26000 and heading towards 30000. Many Market experts estimating these milestones will be achieved in 1 - 2 years of time. But nobody knows what happens to the world in the next moment. So, keeping aside all these projections, what a small investor has to do at this moment? Which approach he has to follow? 


Approaches to be followed by Existing Investor:

1. Long Term Approach:


You have been investing in Stocks / Mutual funds for quite some time and you will be lured by the new heights of Sensex / Nifty. However, this is the right time for you to reshuffle your portfolio. Kick out all the Non performers (stocks / Mutual funds) from your portfolio. Hold all the best performing stocks and Mutual funds. Your approach should be long term. Continue your SIPs with well performing Mutual funds. If you have surplus money, increase your SIP amount and continue.

2. Reshuffle your Portfolio:


Government is concentrating more on some sectors like Infrastructure, IT, Automobile, Engineering etc. Our Prime Minister already confirmed this on many occasions. Many foreign countries are looking towards India for Investments. This is already reflecting in the Markets. This is just beginning of rally. Many experts believing Markets will reach many more milestones in the coming years. Hence, this is the right time for you to re-shuffle your portfolio with promising sector stocks. You can look for some Sector Mutual funds and invest through SIP approach for short term. However, the investments into these Sector Mutual funds should not be more than 10% of your total investments. I suggest you can look for Infrastructure Mutual funds and Banking & Finance Mutual funds.

3. Stick to Fundamentals:


During Market rallies, some Mid and Small cap stocks would also climb. However, if any thing happens to Markets, these stocks would loss heavily. So, it is always suggestible to select the sectors and stocks with strong fundamentals and keep on investing. Forget about Market rallies and vallies, your approach should be investing in quality stocks and Mutual funds. Do not invest into Mid and Small cap stocks for quick returns, because these stocks have already reached new heights and now the performance based correction is being happened.

4. Maintain Diversification:


One of the basic principle in Investments is Do not put all your eggs in one basket. Though the Markets are in bullish mode and it continues for some more time, do not park all your investments in Stock market / Mutual funds. Continue the existing diversification in investments. Based on the Market sentiments, you can alter your portfolio at most 10% - 20% only. Investments in other Debts, Gold, Real estate etc. should be continued till you reach your financial goal.

5. Align to your financial goals:


Continue the investments which are aligned to your long term financial goals. Do not disturb them. If you are reaching to your time horizon for any of the financial goal, then better transfer the corpus from higher risk investments to safer investments and maintain there till the end of the time horizon.



Conclusion:

Riding on the Bull is risky. Though the markets are in bullish and continue for some more time, you should continue your investments with the current approach and if you are interested you can play with the market up to 10% of your investments only. Do remember, no one can predict the Market trends and investing in Markets is more risky for short term.
Happy Investing!

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