“Absence of firm cues is confusing for many investors. Mostly one group always gets the upper hand. But this time around, the market is divided” says a financial planner. “Ever since covid started many investors have been saying it is time to get out of the market. But the market has given phenomenal returns. That’s why investors can’t make up their mind.”
Rushabh Desai, an AMFI- registered mutual fund distributor, based in Mumbai, says many investors are still interested in equity because all other asset classes like gold, debt funds, among others are offering poor returns. Even if they want, investors don’t have much of a choice. That could explain why they continue to invest in equity,” says Desai.
In fact, the Indian stock market has been going up, belying predictions, on the back of liquidity. Easy money has been driving up asset prices across the globe. Many investment pundits have been warning of an imminent correction in the market. Of course, there is no unanimous opinion on when it will materialise. Desai too believes investors should be mindful that the picture would be very different when liquidity is tightened.
At the moment nobody wants to hurt growth prospects of the economy in the backdrop of covid. So nobody thinks of sucking out the excess liquidity or hike rates, which they would be forced to do eventually.
“The market pundits have been asking investors to not bet against the central bank and liquidity and be careful about their investments. In fact, you won’t be able to do much in this scenario. All you can do is to play it very safe,” says the financial planner.
That brings us back to sticking to one’s investment plan and continuing with the investments. “Do not tinker with your plan much based on market conditions. It could be counterproductive. Don’t be adventurous. That’s all you need to do,” says the financial planner.
