On the morning of February 24th, domestic stock markets witnessed a plunge by over 3% due to the escalating Russia-Ukraine conflict and rising crude oil prices. In fact, all sectoral indices, including IT, realty, auto, and metal stocks trading and telecom, witnessed a trading loss of up to 4%.
Hence, the Indian market is witnessing selling pressure to recover the losses. This means valuations are attractive currently, making it an excellent time to make investments. But should you buy during the dip, or should you wait? Read on to know more.
1. Experts say – wait a bit
Given the market is currently volatile, experts advise long-term investors with an investment horizon between 5-7 years to follow the ‘wait and watch’ approach. This means even though markets are facing a slump, investors shouldn’t sell panicking. You should hold on to your long-term investment and give it some time in the market to grow.
2. Invest in domestic economy-facing sectors and gold
Geopolitical issues usually provide a good buying opportunity for long-term investors. That’s because when markets crash, you can buy scheme units or stocks at a lower price. However, even long-term investors must focus on investing, especially in domestic economy-facing sectors like real estate, infrastructure capital goods, etc., during the Russia Ukraine crisis.
Additionally, you can consider buying gold since it is known to outperform during calamities and inflationary environments.
Additional Read – Russia Ukraine Conflict: What Does It Mean for Investors?
3. Pick up quality stocks and only add light positions
Both domestic and global markets are volatile currently. Hence, there is no telling when or how markets will rise in the short term. Therefore, it is wiser for you to allocate small portions of your investible capital to buy quality stocks that have a history of faring well.
4. Opt for SIPs instead of lump sums
Since Russia, the world’s second-largest crude oil exporter, is at war, oil prices are bound to shoot up globally. To counter the rising prices, the Indian Government will float fuel subsidies. Hence, sectors like downstream energy stocks and banking and NBFCs will see growth, thanks to the higher interest rates.
Note that such short-term volatility will subside only once there is clarity on US rate hikes and sanctions. So, you can keep investing in mutual funds via SIPs instead of making lumpsum investments. That way, your long-term investment plans won’t be affected by these market dips.
5. Diversify investments
With markets trading at discounted rates, you can buy stocks at lower prices currently. So, here’s another addition to this list of investors’ tips. Check your investment portfolio now and assess if it requires diversification. In case it does, allocate small funds to quality stocks in companies of different market capitalisations. This will allow you to absorb losses better in the long run.
Additional Read – Top 5 investment lessons learnt during the pandemic!
Over to you
During such a turbulent market period, it is best to avoid making hasty decisions when it comes to investments. However, that doesn’t mean you shouldn’t enjoy the benefits of the current dip. Invest cautiously after measuring the risks involved, and if you need any help along the way, Tata Capital’s Moneyfy app is here to help you out.
Compare stocks, evaluate your risk profile, and make investments on the go with our online app. Download today!