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Sensex crosses 10K; 10 things you should do now

Anusha Subramanian and Suman Layak list the 10 things investors should remember.

india Updated: Feb 07, 2006 02:14 IST

The Sensex climbed past 10,000. True, it quickly dropped back to end at 9,980.42, but retail investors’ notional wealth rose by Rs 43,489 crore in the day to touch Rs 26.15 lakh crore. Pros had some advice for small fry — do your research, track your stocks and invest for long-term gains.Anusha SubramanianandSuman Layaklist the 10 things investors should
remember.

Don’t rush into anything

Experts urged investors to stay calm and take a long-term view. Sums up Arun Kejriwal, independent market analyst, “Life does not change after 10,000. This is just a psychological barrier. It is not a certification of the health of the market.”

Be stock specific

Devendra Choksi, of K.R. Choksi Securities, says, “This is a great opportunity to build a long-term portfolio. Investors must have a stock specific approach now, investing because they believe in a particular stock.”

Don’t expect miracles

Amid the hysteria, remember that there are some stocks which have not moved while the Sensex moved from 9,000 to 10,000. Don’t expect all stocks to perform miracles.

Don’t panic if there is a big drop

Dinesh Thakkar, chairman of Angel Broking, allays fears of an impending crash. “The market today is not overbought. There are no high outstanding positions like there were in 1992 or 2001. But you should not react to a correction now. Invest regularly over the next two months.”

Invest in mutual funds

Are the levels too high? Or is this the right time to invest? If you aren’t sure, use the help of a portfolio manager. Or better still, invest in mutual funds.

Diversify, re-evaluate

The rise in prices might have skewed your portfolio in favour of equities. This is the time to adjust it if you want. Jayant Pai, vice-president at Parag Parikh Financials, says, “If your investment in the last year has been 60 per cent in equities and 40 per cent in non-equity instruments, the prices would have changed that ratio.”

Don’t expect huge returns

Nilesh Shah, president, Private Clients at Edelweiss Capital, explains: “At current levels, investors need to be choosy. Bear in mind that at this point one should not expect more than 10-15 per cent returns from current levels.”

Look at mid- and small-cap stocks

There’s no such thing as free money. If you want to make bucks in a bull run, you’ll have to work for it. There are several good picks outside the Sensex in small and mid-cap stocks. You have to make the effort to look for them.

Spread your investments

Thakkar offers a strategy. “Divide your money in three. Invest a third now. Assess the Budget’s impact and invest the next part then. Invest the last third a month later. This will average out your investment.”

Buy if there is a 5 per cent drop

If the Sensex drops five per cent, invest the last one-third right away.

First Published: Feb 07, 2006 02:14 IST