Don't get rattled by D-Street's volatile swings
Equity investors must not get unnerved by short-term corrections and stay invested for the long term
D-Street is not one way road and investors should stay prepared to navigate ups and downs.
New investors must be sitting on a decent profit as the benchmark BSE Sensex has rallied 85% from its March 24, 2020 lows.
The correction, which the market witnessed last week, is a part of the stock market. Therefore, you should stay prepared for successive 5-day, 6-day or even 7-day kind of fall after a big rally in the market. I believe these kind of corrections are healthy for a long-term investor and brings an opportunity to buy quality stocks on dips.
The BSE Sensex declined 933 points, or nearly 2%, to 49,858.24 on March 19 from 50,792.08 on March 12. Likewise, the NSE Nifty slipped 287 points, or 2%, during the same period.
It seems that external factors like rising bond yields in the US and weak global cues mainly impacted the market last week. However, the long-term outlook of the Indian equity market still looks intact and indicators like V-shaped recovery, recent GST collections are positive developments.
GST collections crossed the Rs 1 lakh crore-mark for the fifth month in a row in February, rising 7% annually to over Rs 1.13 lakh crore, indicating economic recovery, the finance ministry said earlier this month.
GST collections rose for two straight months to touch Rs 1.20 lakh crore in January and Rs 1.15 lakh crore in December.
The gross GST revenue in February 2021 stood at Rs 1.13 lakh crore, of which Central GST came in at Rs 21,092 crore, state GST at Rs 27,273 crore, Integrated GST at Rs 55,253 crore (including Rs 24,382 crore collected on import of goods) and cess at Rs 9,525 crore (including Rs 660 crore collected on import of goods).
Secondly, the government has clearly expressed its intent for growth via announcements made in the Union Budget, with focus on infrastructure development, capex and job creation.
Thirdly and most importantly, it seems that India Inc is like to post high double-digit earnings growth as the worst of the asset quality issues in the banking space seem to be behind us. Hence, all these factors amid the low-interest rate scenario are conducive for equity investments.
In the end, I would like to say that equity investors must not get unnerved by short-term corrections and stay invested for the long term. Happy Investing.