Is it a good time to invest in stocks? Bullish Stock Market
- Asked By
- Updated On:03-Feb-2021
- Replies:2
Short Answer
There are several questions that one can ask your advisor. These questions include whether its good time to enter or exit the market? Should in exit from debt and move to FD? do I continue my SIP portfolio? and other such questions.
Detailed Answer
The stock market has been making new all-time highs every other day. RBI raised interest rates successively and gold is not performing well. Given this scenario, what the investors should ask their financial advisor?
1. Since the market is all time high? Is this the good time to enter the market?
There is no good/bad time to enter the market. The equity market always gives an opportunity at all time unless and otherwise, the investor wants to stay for a short period of time. The possibility of getting a negative return shades away if we stay invested for more years in equity. Experts advise investors not to time the market rather time-in the market that gives a better return.
2. Since the market is all time high? Should I exit from my equity portfolio?
The investor can de-risk their portfolio, if their time to achieve financial goal is less than 3 years. If the time to goal is more than 5 years, it advisable to remain invested and you may invest further in a staggered manner. As the earnings are positive, this can lead to gain in the stock prices.
Again, it is the ideal time to rebalance the asset allocation as the equity market has run up quiet a bit. Assuming, the investor maintains an asset allocation of 70% in equity and 30% in debt. The equity allocation could have topped due to the recent run up in the equity market and the present allocation could be 80% in equity and 20% in debt. It is advisable to book profit from the runner and move it into debt to ensure that the portfolio is well balanced.
3. RBI is increasing the interest rate consecutively for the last two monetary policy reviews. Should I exit from debt and move to fixed deposit?
The crude oil increase has an impact in the CAD. The increase in crude oil also put a pressure in the inflation and hence RBI is in the urge of rising interest rates in the last few monetary policies. This leaves the investor getting more interest from the fixed deposits.
The best tax efficient investment seems to be debt mutual funds. The debt mutual funds provides an indexation benefit on the investments held for more than 3 years.
Though the 10year G-sec price is trading at 7.782. We are in the opine that the interest rate may go up further and hence it may be better to invest in accrual funds than a duration strategy. People also invest in ultrashort term and medium term funds to get a decent return.
4. Do I continue my SIP portfolio?
SIP can be continued if the time to goal is long period. If the time to goal is less than 3 years, it is better to stay away from equity and start the SIP portfolio in debt mutual funds to avoid bigger risk.
To accumulate more units through SIP route is getting popular these days. The market may be volatile due to various local and global events.
5. Though the market is high, why is my portfolio is negative?
In the last 7 months, the BSE Sensex started the year with a positive note and was down after the budget announcement on LTCG. This was further down due to PNB fraud case and US-China Tradewar.
However, this started recovering and ended up in July with the positive return of 10%. Though the sensex has delivered a 10% positive return, the midcap & smallcap has delivered a negative return. If the investor portfolio is aligned towards mid & smallcap the overall portfolio returns would be negative.
Sensex Returns Jan-Jul-2018
BSE small cap -13.9%
BSE Midcap -10.4%
BSE largecap 10.4%
Disclaimer: Mutual funds are subject to market risks. This post is not a professional advice in any regard.
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (1)
We all dream of getting rich. A bullish stock market is a golden opportunity, if you already bought stocks when the market was bearish. So, let's see how can you get rich in a bullish market when the stock prices are rising.
Making profits off the stock market is easier said than done. However, if you want to make 50,000 rupees as profits, you would have to consider intraday and F&O options in trading. But then factors such as stock selection, investment amount do play a significant role in the profits your reap.
There are various terms that play a huge role in determining how to choose stocks for long term investment such as P/E ratio, dividend consistency, etc. For a more elaborative information head below and read the explanation given for better understanding.
Undertaking fundamental analysis and proper research is essential before investing in any particular stock. Apart from this, you should also consider asking seven key questions like 'What does the company do', 'How is it placed among its peers', 'How is the management of the company', etc before investing in it.
The Mirae Asset NYSE FANG Plus ETF Fund is a good option for Investors who want foreign exposure. The Equity allocation is very concentrated to just 10 stocks which makes this ETF very volatile and risky. This ETF consists of the top 10 stocks in their respective sectors mostly TECH, like Amazon, Netflix. Facebook, etc. Hence Investors with high-risk tolerance and a long time period should consider this fund.
Discount brokers have gained a lot of popularity in the past couple of years. Zerodha is currently India's largest and most trusted discount broker which is also the best option for beginners. It has all the necessary qualities required for a good broker like low commissions, low-maintenance charges, high-quality trading terminal, etc.
IPOs can be a good option for beginners as they provide an opportunity to get the shares of good companies at an attractive price. Though IPOs can provide good listing gains and quick profits, good companies can help you to create massive wealth in the long term.
Bull markets are identified when the stock sees a rally in its price, increasing, and there are lesser chances of it crashing. Conversely, a Bearish market is when the stock market plunges, and the stocks lose its value due to several reasons affecting its performance. Mostly the color green on a stock market chart is bullish, and the color red is bearish. However, these are prolonged over a couple of days to determine the nature of the market.
A common question that a newbie trader wishes to ask, what is the minimum amount I need to start stock trading in India? A query whose answer we probably look for to initiate our stock investment journey.
Small case is an intermediatory platform that helps investors looking to make investments in a basket of stocks ranging through different portfolios quite simple and straightforward. You can choose from various stock portfolios and make necessary SIP's or one-time investments to hold them or sell them based on your preference.
Harshil Patel
During a bullish market, you would find massive dips in stocks. Instead, try to seek an opportunity where you can buy in smaller dips in a bullish market and then sell it at a higher price. Conversely, you can invest extensively in a bearish market and sell in a bullish market.