‘Never use stock market for short-term investments’

Debasmita Dutta
Tuesday, 6 February 2018

Pune: The stock market on Tuesday crashed by more than 1,000 points triggered by the US market. Some investors are worried and confused but many prudent investors are taking advantage of the current market downfall by investing at this level at a good valuation. This worldwide market downfall is giving tension to people who had invested to make quick money, but experts say the stock market should never be used for short-term investment. Those who invested by long-term financial planning will benefit as they will get a better valuation.

Pune: The stock market on Tuesday crashed by more than 1,000 points triggered by the US market. Some investors are worried and confused but many prudent investors are taking advantage of the current market downfall by investing at this level at a good valuation. This worldwide market downfall is giving tension to people who had invested to make quick money, but experts say the stock market should never be used for short-term investment. Those who invested by long-term financial planning will benefit as they will get a better valuation.
As stated by market experts, from the chain reaction of the collapse in US markets, this market correction was expected. “The share market in India opened sharply lower on weak global cues and languished in negative terrain with sharp losses till afternoon trade. However, markets trimmed intra day losses in mid-afternoon trade as trading in the US index futures indicated a positive opening for the US stocks, later in the global trading day,” said Karthikraj Lakshmanan, Senior Fund Manager-Equities in BNP Paribas Mutual Fund.

Asian markets, including India, responded to a sharp sell-off on Wall Street, overnight. The sharp sell-off in the Indian markets can be attributed to investors booking profits after the recent rally and ahead of the implementation of the long-term capital gains tax on equities. All the sectoral indicators on the National Stock Exchange (NSE) lost over one per cent in trade today with select healthcare, PSU banking and IT stocks losing in the range of 3-5 per cent,” he added.

“The massive correction in the share markets has happened all over the world and it has nothing to do with domestic reasons. It is only due to the global fall. Coincidentally, correction in the US started after our budget. Though, US market index has gone up continuously from almost 2009 to 2018. From December 2017 to January 2018, it was one side up. And therefore, the correction was overdue in the US since the valuations were overstretched and running ahead of fundamentals. Therefore, it was known that such valuations will not sustain. Since we live in a global village, US fall is echoing and reacted in all other countries including India,” said Suhas Rajderkar, Director of A3S Financial Solutions.

“Experts were anticipating this correction from almost past 6 months,” said S Naren, CIO of ICICI Pru Mutual Fund. It was advised to shift from equity to liquid to a great extent.

Shobha Salunke, a retired professional from the automobile industry, said, “I am always investing in long-term plans and this market crash has not at all effected my investment plans. I am looking forward to investing more in units now, as this can be a good scope for my future investment plans.”

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