scorecardresearchNot sure how to prepare for volatile markets in 2023? FundsIndia Research shares two suggestions

Not sure how to prepare for volatile markets in 2023? FundsIndia Research shares two suggestions

Updated: 03 Feb 2023, 10:56 AM IST
TL;DR.
  • The online investment platform company suggests that investors assess their asset allocation and reassess their expectations.
FundsIndia Research on how to get ready for 2023

FundsIndia Research on how to get ready for 2023

The Indian market has had a good up-move in calendar year (CY) 2022 when compared to the global markets, but it has seen high volatility, which has left investors anxious, in the light of global events like the Russia-Ukraine war, rising interest rates, among others.

The fear of volatility still exists even though it is projected that Indian benchmark indices would reach new highs in 2023.

Volatility of Sensex in 2022

For Sensex, it was its seventh consistent year of positive returns on a year-on-year basis.

However, during the year, according to MFI's data on the benchmark index, Sensex traded 5 percent below its top level in 2022 on 140 of the 248 trading days that year, or almost 56 percent of the entire trading year. Sensex fell below 10 percent of its peak level on 60 out of 248 days, and on 5 of those days, it fell 15 percent below the mark.  

The Sensex ended 4.4 percent higher in 2022.

Article
Sensex data from MFI

“Historically, equity markets have gone through temporary declines of 10-20% almost every year. Nearly one-fourth of the days in 2022 saw Sensex trade at least 10% down from the peak levels at that time. The year 2022 was a perfectly normal year for Equities both from a volatility and bad news standpoint. As a reality check, this is exactly what you signed up for,” said Shrinath ML, Senior Research Analyst, FundsIndia.

 

Article
Sensex in 2022

FundsIndia Research, an online investment platform, offers two suggestions on how to get ready for 2023 without worrying about fluctuating markets all night long.

The online investment platform company suggests that rather of fretting, investors should be conscious of their priorities, have faith in their investment strategies, and be aware of long-term market expectations.

How to get ready for 2023:

Remind yourselves of what to expect - Equity markets experience falls between 10 and 20 percent almost annually, as we've already witnessed. And there have been significant drops of 30-60 percent every 7 to 10 years. Consider these as part of your fundamental assumptions.

Revisit your asset allocation - If the market volatility last year didn't keep you up at night, you're good to go for 2023. Keep at your asset allocation strategy and rebalance if any asset class departs from it by more than 5 percent from the original asset allocation.

However, if 2022 has given you nightmares, you're probably overexposed to stocks and it's time to review your original asset allocation.

Article
Investors often prefer to invest in mutual funds that consistently beat the benchmark indices.
First Published: 09 Jan 2023, 07:28 PM IST