It's time to buy. It's time to sell. Whenever the market hits a big number, advice starts to pour in. What should you do? The answer: depends on what your financial goals are.
The sudden 1,000-point (or 5.5 per cent) rise in the market benchmark, the BSE Sensex, in just eight sessions to cross the 19,000-mark — the first time since January 2008 — can unnerve anyone.
But, if trading is not your full-time occupation and the equity market is simply an instrument that help you create long-term wealth, the Sensex closing of 19,208 or the NSE Nifty closing at 5,760 on Monday should not mean very much.
If you have an investment plan in place, continue to follow it. If not, make one, and depending upon your risk-taking ability, use equities to give your portfolio a kick.
"I don't think a market top or bottom should come in the way of a long-term investment plan of any investor," said Ashu Suyash, MD and country head, Fidelity Mutual Fund.
"Markets can be volatile in short term as the rally is driven by foreign institutional investors and hence investors should be cautious," said Nirmal Jain, chairman, India Infoline. "But since the underlying fundamentals are sound, long-term investors have nothing to worry." FIIs have pumped in a total of Rs 63,961 crore since January 2010, and Rs 4,579 in September alone.
As for as short-term traders and speculators, expert advice is: go large. Growth lies in large and fundamentally strong stocks.
"We are getting into a period where if it falls the impact would be harder on small and mid-sized companies," said Ajay Bagga, head of private wealth management at Deutsche Bank. "Hence, one should invest in large stocks and diversified mutual funds."
Over the past 12 months, the Sensex has risen by 18.5 per cent, the highest among major world markets, so short-term investors whose investment objectives have been met, can "book profits", that is sell a part of their portfolio.