Finally, when investors start celebrating their winning positions in the markets, another wave of downtrends is about to come. The markets have already been corrected and all dusted, and unusual hype in the valuation of the company have taken their original places.
Does that mean a real crisis is now going to reveal its true face? Well, answers to these questions will be given by the market only with the time, but all we can do is take financial measures that can keep us financially stable at the time of the worsening economic situation of the country.
What does RBI's bi-monthly look like?
There are a few economic aspects on which RBI is likely to focus upon:
- RBI is likely to focus on skyrocketing domestic inflation rates and is concerned with aligning the tone with global actions.
- RBI is also likely to take strict actions to control the situation of drying up liquidity issues due to global economic factors
- We can expect a 50 bps rate hike, which is a fourth consecutive hike of the year.
What can we do?
Here are key factors you must keep an eye on, which will help you in maintaining your financial position and minimising your losses.
Assets allocation
If you have allocated your assets majorly in equity funds, your returns might be adversely affected as the central bank’s rate hikes negatively impact the stock markets. If you want to be protected from the negative impacts of RBI policy rate hikes, you can invest in short-term debt funds. It might give you a decent amount of returns in such a scenario.
However, the impacts of RBI policies are not necessarily going to be proved negative for you as an investor.
Technical view of the stock markets
The Nifty formed a reasonable bear candle with a long upper shadow on the weekly chart. The daily and weekly time frame charts indicate that the negative momentum appears to have increased.
If you have invested in fundamentally strong companies, you do not have to worry about candlestick charts. You can trust the management of the companies and wait for the market to be corrected.
Corporate actions
There are various companies in action which might help you in increasing your position in the company and give you benefits in the long term. Corporate actions like bonus issues, right issues, and stock splits will help you in increasing your total number of shares without dealing with market volatility.
A few companies like Excel Realty N Infra Ltd. and Pondy Oxides and Chemicals Ltd. are issuing bonuses this week, which will lead you to an increase in the number of shares in your demat account without having to pay anything. A few fundamentally strong companies have come up with IPOs, like Harsha Engineers, which have performed well and oversubscribed 74.70 times the previous week.
The stock market is volatile in nature and gets affected by macro and microeconomic factors. You cannot control the prevailing situation of the stock market, but you can control your sentiments while making an investment decision. As an investor, a downtrend of the market could become an opportunity for you to implement your value investing technique to identify a strong potential in a company and wait for a long term to grow your money.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com
Disclaimer: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.
