What an Investor should do when BSE sensex is at 40,000 Levels?

Sensex scaled u pnew High of 40,000 Levels and but the Mutal fund and Direct Equity investors are not cheering much.

 Most of the Top Performing Funds are lower than their Peaks levels, but Index is at his peak level.  The current rally is only with the Large Cap funds and In particular only few stocks like HDFC Bank, TCS, Reliance Etc. This phenomenon is called concentrated rally.

Since Mutal Funds manage their portfolio with diversified base of 50 – 60 companies, for the short term, Mutual Funds may give you lower returns if this concentrated rally continues.

What an Investor should do at this juncture?

  1. Don’t Invest an Forget

Most of the investor will never review their portfolios, Schemes, Funds and Financial Assets.  It is very critical to review your portfolio once in 4 Months and to check everything in the portfolio is in the order ( Both the Investment Objective and Progress is in right Direction )

  • Diversify and Invest in Equities

If you already achieved good diversification then stick to your Asset Allocation.  Othersise diversify your investments to all categories like Large Cap, Large & Mid cap, Mid cap and Small Cap.

  • Thematic Funds

When you have a horizon of  7 year and above you can consider investing in themes like Banking and Financial Sector and Consumption . These schemes have delivered higher returns and most importantly surpassed the benchmark returns.

But pls be cautious that these investments should be experimented only when you have substantial diversification on your portfolio.  

  • Avoid Timing the Market

Do not wait for the market to come to 36000 Levels, Instead choose Multiple strategies like Systematic Investment Plan (SIP), Systematic transfer Plan (STP), Switch etc are available to take care of the short term volatility.  Invest in a Short term liquid fund and systematically transfer your money to a chosen equity fund.

Note – Pls consult with your Wealth Consultant / Financial Advisor about your Personal Risk Profiling and Investment Compatibility before investing in Mid Caps, Small caps and Other Thematic Funds

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Sathish Kumar

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