Evaluate investments with eye on future
Investors across the world are wondering what should be their next move under the current circumstances. As far as the Indian investor is concerned, he could benefit from carefully evaluating the situation.Updated: Sep 18, 2008 21:41 IST
Investors across the world are wondering what should be their next move under the current circumstances. As far as the Indian investor is concerned, he could benefit from carefully evaluating the situation. Just running around trying to do something because of the turmoil is not likely to help much. An individual’s exposure to different areas and the manner in which he evaluates the position is vital to how he will fare.
Financial institution exposure
An investor could be affected if the financial institution in which he has invested has some exposure with the troubled banks or institutions. This can raise the possibility of incurring loss on these investments and this will be reflected in the value of the institutions on the stock exchange. At the moment there is no major worry on this front for Indian entities and the investor should act accordingly.
Investment in Indian firms
There might be Indian companies where these troubled banks and institutions hold a stake and this can be sold off in the market or through some other way. In that sense there can be a pressure on the price of such companies. This can result in erosion of value in the books of investors.
If the fundamentals of the company are strong then the future performance can be expected to be good. This should be the determining factor of holding these companies in the portfolio.
Investors in equity have already born the brunt of losses that have befallen. There is no great benefit in now trying to sell off equities just because their prices have fallen or because the expectation is not too high in the future. It would be better to take an overall view of the investment and look at ways and means to consolidate their position, especially with respect to those areas where a rise can be expected in future.