I think the underlying query for both questions is what to do in the current market scenario. Whether to buy stocks, stay put and keep holding fort, or go for outperformers, or stay put in whatever you hold, so on and so forth.
I think this whole mental exercise can be broken down into simpler tasks. First is if you are invested fully in sound companies, with good prospects, it makes sense to do nothing, Try to keep yourself updated with newsflow, try reading books from pending list, or if you want to take a break from it all, take a vacation.
For those with cash on hand, its simple. Make a list of stocks to buy by doing appropriate homework, and then let the stock prices and market settle and then take a call to buy. Or if you can figure out attractive levels to enter, based on either fundamental analysis or technical analysis, then try buying in small lots and test the waters.
I am now used to these kind of corrections, having seen them multiple times. Only problem is that its difficult to foresee them and predict correctly. So having a strategy to deal with these market volatility is important. I usually have a focus group of stocks, some of which I am invested in and some which are in my wishlist. Many a times, it happens that in situations like the current ones, tweaking the portfolio becomes easy as most stocks fall to various extents and there are often great bargains on the market. So one has to have the courage to rebalance the portfolio. But in my experience, even if nothing is done, if the company in question continues to perform and deliver good results, ultimately prices tend to track earnings. So the only thing needed with these companies is to nurture them through tough times and maintain our own sanity.
Technically, on nifty, the level of 18000-18100 was appearing to be a good support. But once that broke, the fall was very swift and next level to watch out for was 17800. Today that level was tested. We need to see how next few days pan out. Next level to watch out for is 17600 which is 61.8% retracement of entire rise from 16700 to nearly 18900. While the 200 dema is placed at 17435. However with the kind of correction and panic we are seeing, no levels are sacrosanct.
In market corrections, if one has to panic, it has to be very early on. And that’s a difficult to thing because most sharp corrections begin with mild corrections and then acquire ferocity, almost like a storm. But as with most situations, the one sentence that keeps one going is “this too shall pass. ” Thankfully these days, the corrections and subsequent rallies are quite short lived, so times change quickly.
| Subscribe To Our Free Newsletter |
