From 1985 to 2021, there were three phases where the Sensex gave positive returns for 6 consecutive years. This happened for the first time from 1988 to 1994, then from 2002 to 2007, and for the third time, it was seen from 2016 to 2021, ie 4 months ago. Well, in the first case, the stretch of positive returns has been for 7 years, but in the third case, it looks very difficult, which is happening this year. So will 2022 be a loss-making year?
Let us see that we analyze Indian equities from different perspectives – valuation premium, greed, and fear, what can outperform, and finally where is the market headed.
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According to experts, 2022 could be the first deficit year in 6 years
Volatility crashes and corrections are an ‘important' part of any investment cycle. ‘2022' could turn out to be a negative year for a lot of Indian and global experts due to various reasons.
Moreover, Indians are already suffering from inflation – be it petrol, edible oil, lemon, and other essential commodities. Retail inflation is already at 6.95% and we all know how an increase in inflation is inversely related to stock market prices – so if inflation strikes, stock prices will also fall and then this fall will negatively impact the market. will be affected by
Due to the now ongoing inflation, the Russo-Ukraine war, and high Fed interest rates, foreign portfolio investors also pulled out some 17,500 crores from the March Indian market. All this ‘not-so-positive' situation has now put traders and investors on high alert as traders are also in a lot of ‘fear mode' and are afraid to invest any time in the market.
Then, the combined market valuation of four of the ten most valuable companies on the stock exchanges saw a major correction – resulting in a fall of over ₹1 lakh crore. IT giants TCS and Infosys emerged as the top foot-draggers ahead of their Q4 results, while Reliance Industries and Bajaj finance also posted significant declines in their valuations.
According to which the market is still not going towards the bullish trend, gradually it is being seen that, 2022 Now really can be loss Making Year.
Now such a situation, what should be your best strategy?
Defensive Strategy – You can choose this strategy if you want to maintain your position in the market irrespective of the market conditions. In this strategy, you are advised to invest in large corporations with a long operating history and strong balance sheets. This is because stable, large-cap companies are usually less affected by a downturn in the stock market. Therefore, their share prices will be less vulnerable.
Dollar-Cost Averaging – Since stock prices tend to fall during a bear market, it is easier for you to buy more stocks at a lower price. According to this strategy, you invest a small and fixed amount in the stock market every month, irrespective of how the market performs. It is recommended that you choose stocks that have value and pay dividends. Dividends benefit from equities making the bear market less painful for you.
Also, keep your fears in check, and make 2022 the base point for your long-term investments. – Big deal, act small formula and invest your money very carefully. The cycle of the positive and negative market continues in the stock market, so keep in mind that after 6 years if this negative turn has come, then after going through this situation, positive and bull market will also come. If you are investing wisely and carefully, then envision tremendous growth after all these years.