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Stay invested for the long-term

It is only natural to feel jittery about investing in the market especially at a time when the benchmark Sensex of the Bombay Stock Exchange tumbled by around 1,000 points in just two days.

business Updated: Jan 11, 2011 00:21 IST
Sandeep Singh

It is only natural to feel jittery about investing in the market especially at a time when the benchmark Sensex of the Bombay Stock Exchange tumbled by around 1,000 points in just two days. However, the fall should concern short-term traders and not bother you if you have invested with a long-term view on the markets.

Your mutual fund systematic investment plan (SIP) should continue since investments a falling market has the ability to fetch higher returns when the market bounces back.

“There may be pressure in the short term and the market may correct but there is no question about the structure of growth in India in the long-term and hence investors should continue with their investments,” said Rajiv Anand, CEO, Axis Mutual Fund.

When the Sensext hit 21,000 around Diwali amidst strong inflows from foreign institutional investors (FIIs), many had sensed a missed opportunity. However, the current corrections throw open an opportunity to get in and take advantage of the long-term India growth story, though not before the market stabilises.

“Investors should hold on to their existing investments but wait for some time to make fresh investments. Let the dust settle down and the market stabilise before you get in with a long-term view on India growth story,” said R Venkataraman, executive director, India Infoline Financial Services.

While inflation figures, IIP (index of industrial production) numbers and the Reserve Bank of India’s interest rate stance will be announced over the next few days, investors should stay put.

Booking loss is the last thing that one should do in the current environment. Whatever loss that one may have incurred over the past five trading sessions (when the market lost 1,337 points or 6.6%) as a result of the correction is just a notional loss and hence one should stick to long-term investment plans. It was a manic Monday