How to get yourself going in a down stock market?

The current market scenario is making investors think really hard over what to opt for and what to avoid. Even though inflation along with crude oil prices have also taken a hit, the situation is not positive by any means, with the sensex now looking towards returning to four figures. Yesterady, the sensex crashed yet again as even more top-line stocks fell to their 52 weeks low and closed at the same levels without any sign of recovery. Investors still have to line up and wait for their turn till the market becomes stable. But the question arises, what are the investors supposed to do in this situation?

It's high time when an investor has to take a look at his portfolio and get them reshuffled so as to give more preferences to companies enjoying leadership position in several segments of the industry. Investors need to take into account that their portfolios need to be switched to large cap in case there is higher exposure to mid cap and small cap. This is because large caps, which are the asset class and are hence slated to move up first when the markets revive, are clearly the best bet, and more so in a down market which makes them all the more affordable. Moreover, it is better to enter equity particularly through diversified equity funds in case the exposure to equities is low.

The next precaution is to never put one's eggs in the same basket; it is always better to invest in diversified stocks. This call of action safeguards the interest of the market players due to the presence of vulnerability of any particular stock becoming a prey to the whims and perpetually changing market scenario.

All in all, investors are advised to keep themselves invested and use the current downturn to add more stocks to their inventory in a systematic and disciplined way. Not only this, they should also look forward to following a proper asset allocation methodology to curtail risk to a certain limit, in case they are interested in relatively short term gains.

Mutual Funds- A Promising Investment Option

The market is continually facing volatility which has led to panic among the investors. Further, constantly fluctuating global economies have had their share of impact on the sentiment of the Sensex, hence making it difficult to take a call on any particular stock . Many investors who had placed their money directly in equities after the phenomenal bull run of last year have suffered heavy losses. Several stocks which were trading at all time highs have tumbled to their yearly lows in a matter of months. In this regard, equity oriented mutual funds, which are currently hovering around at very low NAVs, are the right opportunity for long term investors to invest and get handsome results.

The main advantage that mutual funds offer is that of a diversified portfolio investment which reduces the risk because all stocks do not decline at the same time and in the same proportion. A gullible investor hardly achieves anything in the course of direct stock market trading whereas the same amount of money invested in top- performing MF schemes fetches him handsome returns. For instance, if I invest only in FMCG and due to some government policy, the entire sector crashes temporarily, I would have to wait until it comes up again to recover my investment. However, had I invested the same amount in a top-performing MF (which is not difficult to find out, courtesy all the popular business publications that give you all the data) I might have not only recovered my investment, but also earned a handsome return. Many of you might be believing that mutual funds, although safe, do not give as profitable returns as direct investment into equities. While I do agree with you to some extent, there are also many mutual funds that give a result of 40% on an average, which is not a bad investment by any means. What's more, you are almost assured to get back your investment, since your money is being handled by industry analysts who are often very accurate. This option is particularly beneficial to the service class, who don't have the time to analyze market trends, and yet want to invest in stocks. Hence, investing in a mutual funds is far more beneficial not only in the present turbulent circumstances but also in general, since the scope for getting a handsome results is now at par with investing directly in equity.