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What are small investors strategies in current stock market upswing?

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What are small investors strategies in current stock market upswing?

Taking ad-hoc decisions based on market levels can hurt your portfolio. Find out which plan of action will be most effective for you in the current scenario.

Here are the strategies of few such investors to help you decide what the best course of action could be in the current market condition.

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As the equity markets touch new highs, many investors are left in the lurch trying to decide what they should do next. While some are excited by this prospect, and want to invest more to make the most of the peak, others are wary of overvaluation and choose to exit. Yet others want to sit tight and see how things turn out before taking a call. Here are the strategies of few such investors to help you decide what the best course of action could be.

Meet Mumbai-based Arjun Amlani, 32, a chartered accountant by profession. Over the past month, Amlani has stopped threeSIPsout of the four he had. Thestocksthat mymutual fundswere holding looked over-valued to me, says Amlani. In a rising market, there are bound to be multiple opinions about valuations. Only in hindsight would we know if the valuations were expensive or not. If we look back at the Nifty level of 9,000, valuations looked expensive then, but the market is up more than 10% from there, says Kunj Bansal, ED & CIO, Centrum Wealth Management. Amlani had been investing Rs 15,000 a month through the three SIPs for two years. Not only is it too early to judge the performance of the funds, but is also unwise to take a call on individual stocks valuations when investing through SIPs. Taking a view on SIPs defeats the whole purpose of opting for systematic investing, says Ashwin Patni, Head, Products and Fund Manager, Axis Mutual Fund.

Although Amlani got a pretty decent return of around 15%, he was still not impressed. I opted for SIPs only because of the fear of missing out, he says. My direct equity portfolio has given me much better returns, in the range of 25-60%, over the past eight years, he adds.

Existing equity portfolio value: Rs 23 lakh in stocks and mutual funds.

Action taken: Stopping three SIPs because of high valuations.

No. This defeats the whole purpose of systematic investing.

Opting for SIPs should not be a function of fear. Further, like stocks, mutual funds too need time to prove their mettle. Being a finance professional, Amlani understands the power of equity for wealth creation, but has more faith in buying stocks on dips and selling them on highs. A better strategy would be to buy stocks that are fundamentally strong at all levels to reduce the risk of losing out on a good stock, suggests Pankaj Karde, Head, Institutional Sales and Trading, Systematix Shares & Stocks.

Also Read:Stock market is rallying: These are the best bets

Some investors, on the other hand, are looking to invest more through SIPs since these have yielded good returns so far. However, taking such ad-hoc decisions based on market levels can hurt your portfolio. Typically, after a bull run, SIP returns will look attractive, but taking only short-term performance into account before starting an SIP can prove counter-productive, says Deepak Jasani, Head, Retail Research, HDFC Securities. Neither starting SIPs nor stopping them should be triggered by market conditions. Opt for them only if your financial goals and target asset allocation plan allow for equity exposure. For instance, if you are underweight in equity based on your asset allocation plan, you can start afresh even at current levels, in a staggered manner, says Harsha Upadhyaya, Chief Investment Officer, Equity, Kotak Mutual Fund. On the contrary, if you are overweight, you might want to rejig your portfolio and invest in other asset classes, he adds.

During bull markets, some investors have the tendency to sit on the sidelines and wait for a correction. Delhi-based Shourya Asthana, 36, a product designer, is a case in the point. I believe, when the US Fed increases interest rates, our markets will correct, says Asthana. However, small investors are better off not trying to predict such market movements. Waiting for correction in a bull market can turn out to be futile. Buying in instalments is a better strategy, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Bansal concurs: Instead of taking such cash calls, which are driven by biases, look at stocks that are relatively better valued.

Existing equity portfolio value: Rs 12.75 lakh in stocks and mutual funds.

Plan of action: Waiting for correction to buy good stocks.

This strategy may not always work. It is best to invest systematically, across market levels, in both stocks and mutual funds to win in the long run.

However, sitting back and doing nothing may be a good strategy for some investors, like Chetan Singh. This 29-year-old Bengaluru-based MNC employee has been investing systematically through market ups and downs for seven years. I invest Rs 20,000 a month to meet a range of goals, from taking a vacation to retirement. says Singh. While SIPs should continue across market levels, its important to note that this calls for reviewing and rebalancing, especially if your target asset allocation goes haywire.

Existing equity portfolio value: Rs 7 lakh in mutual funds.

Plan of action: Continuing to invest through SIPs.

Yes, but fund performance must be reviewed regularly.

Also Read:How to invest in equity mutual funds in current market

Pune-based Akshay Natekar, 33, is self-employed and looks to buy quality stocks on a regular basis, irrespective of market levels. This approach has helped me accumulate some really good stocks over the past 12 years, says Natekar, who has a direct equity portfolio of Rs 8 lakh. He now wants to accumulate Rs 25 lakh, so that he can opt for portfolio management services (PMS). I believe PMS will earn me 1-2% more return than mutual funds and also help diversify my portfolio, says Natekar, who has also built a mutual fund portfolio of Rs 37 lakh. However, it is more advisable forretail investorsto stay away from riskier options like PMS and opt for mutual funds instead.

Existing equity portfolio value: Rs 45 lakh in stocks and mutual funds.

Plan of action: Buying quality stocks at regular intervals and continuing with SIPs.

Yes. But its best not to over-diversify a portfolio with too many stocks and mutual funds.

The current market conditions also call for rebalancing and decluttering your portfolio. Coimbatore-based Muthuraman RMB, 28, is an IT professional. He holds a total of 10 mutual funds, five of which are sectoral funds. It has become a headache to manage these funds, admits Muthuraman, who is now looking to rebalance and trim down his portfolio by moving out of sectoral funds.

Existing equity portfolio value: Rs 5 lakh in mutual funds.

Plan of action: Rebalancing portfolio by moving out of sectoral funds.

Yes, it is best not to invest too much in thematic funds.

While investing in concentrated themes likes sectoral funds can help deliver encouraging returns during growth phases, it can hit you hard during a lull, since theyre cyclical and riskier than large-cap and diversified equity funds. Multi-cap or diversified funds are the best category of equity mutual funds. Also keep in mind that market moves are more stock-specific than sector-specific, says Karde. Small investors should leave sector allocations to financial experts, adds Aditya Makharia, Head of Research, Motilal Oswal Mutual Fund. Muthuramans new strategy is to hold only four funds across the main categorieslarge-, mid- and small-caps, balanced and diversified.

(%)Mirae Asset Tax Saver Direct-G-0.509.589.1910.9522.49Invest NowMirae Asset Tax Saver Reg-G-0.689.088.239.3420.83Invest NowMotilal Oswal Long Term Equity Fund Direct-Growth

ELSS0.399.757.04-3.1117.54Invest NowFeatured

ELSS-0.4111.3810.477.1416.16Start SIPMotilal Oswal Focused 25 Fund Direct-Growth

Large Cap0.3810.458.823.0815.03Invest NowDHFL Pramerica Gilt Direct Plan – Growth

Gilt1.602.836.289.887.64Invest NowDSP Midcap Direct Plan-Growth

Mid Cap-2.068.266.20-4.0414.61Start SIPDHFL Pramerica Hybrid Debt Fund Direct Plan-Growth

Conservative Hybrid0.624.026.269.779.49Invest NowDSP Focus Direct Plan-Growth

Multi Cap0.6312.279.915.5312.70Start SIPMotilal Oswal Multicap 35 Fund Direct-Growth

Multi Cap1.1910.038.46-0.1416.27Invest NowMotilal Oswal Midcap 30 Fund Direct-Growth

Mid Cap-0.5011.268.59-0.809.28Invest NowDHFL Pramerica Large Cap Fund Direct Plan-Growth

Large Cap1.2610.4011.808.9814.03Invest NowDSP Small Cap Direct Plan-Growth

Small Cap-2.4410.842.82-13.318.39Start SIPDSP Equity Opportunities Direct Plan-Growth

Large & MidCap-1.409.227.752.6615.70Start SIPDSP Credit Risk Direct Plan-Growth

Credit Risk-0.051.66-0.52-0.644.93Start SIPMotilal Oswal Long Term Equity Fund Direct-Growth

ELSS0.399.757.04-3.1117.54Invest NowDSP Tax Saver Direct Plan-Growth

ELSS-0.4111.3810.477.1416.16Start SIPDSP Liquidity Direct-Growth

Liquid0.601.783.677.617.20Start SIPICICI Prudential Savings Fund Direct Plan -Growth

Low Duration0.692.174.388.527.90Invest NowDSP Savings Direct Plan-Growth

Money Market0.682.094.158.476.98Start SIPDSP Strategic Bond Direct Plan-Growth

Dynamic Bond-0.451.374.498.506.75Start SIPDSP 10Y G-Sec Fund Direct-Growth

Gilt with 10 year Constant Duration1.482.475.9210.207.31Start SIPDSP Bond Direct-Growth

Medium Duration0.602.443.646.137.48Start SIPDSP Short Term Direct Plan-Growth

Short Duration0.762.264.768.847.59Start SIPDSP Ultra Short Fund Direct Plan-Growth

Ultra Short Duration0.651.973.066.416.97Start SIPDSP Equity Savings Fund Direct-Growth

Equity Savings0.426.235.934.449.28Start SIPDSP Dynamic Asset Allocation Fund Direct-Growth

Dynamic Asset Allocation0.593.194.867.949.66Start SIPDSP Regular Savings Direct Plan-Growth

Conservative Hybrid0.505.113.400.447.15Start SIPDSP Equity & Bond Direct-Growth

Aggressive Hybrid0.099.419.305.2913.27Start SIP

– Returns less then 1 year are absolute and above 1 year are annualised.

– Returns of 1 year are absolute and above 1 year are annualised..

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