The Conflict between Russia and Ukraine has caused an economic catastrophe. The recent stiff sanctions on Russia by America and other western countries have majorly impacted oil, gas, metal, commodities, etc. The spillover impact of the war is clearly seen in inflation due to the largest exports. Well, the geopolitical tensions have hampered exports, Increased inflation, expenditure cycles, household, businesses, government, depreciating rupee compared to dollars, and defense supplies.
However, as the market is volatile; it is the greatest opportunity for investors to make their portfolio in the Indian stock market. Studies have shown a comparison between the 2008 stock market crisis and the Covid 19 pandemic. In both these cases, the Indian economy lead to an unprecedented disruption. Due to fear of crisis, many investors booked losses. Those who patiently waited could see how the Indian stock market in both cases has bounced backed.
Besides, we all witnessed that nifty hit above 17000 after the correction. People have also seen V shape recovery in the Indian economy and stock market. Expert advice would be that Investors should not be panicked or tizzy and focus on long-term growth. It is advisable instead of booking losses wait and hold your scrip in the portfolio. As stated above, we all have witnessed the resilience of the Indian economy in the past. Whether pandemics, scams or political upheavals; the market has bounced back and given returns to those who remained invested.
Here, are some smart investment tips for Indian Investors to keep in mind while looking at the fluctuating economy bars for trading:
1. It is advisable to buy shares or remain invested in blue-chip shares. These are the shares that might be fundamentally and technically high in valuation. At present, these are offered at low prices as compared to the previous pricing, due to FII Selling. So this will be a great opportunity for long-term investors to enter the market.
2. It is evident that the market has reacted with heightened volatility on any negative event like the Kargil war or Russia Ukraine crisis. Therefore, the Indian Rupee is low as compared to the US dollar. It is advisable to invest in the currency as experts believe the rupee will perform and showcase the Strong Indian Economy and will give long-term benefits to investors.
3. The market has been through pandemics, crisis, geopolitical crisis, recession, political upheavals, and world war in the past few decades. However, it has always managed to bounce back. So instead of panicking or overreacting to fluctuations in the market, an Investor should diversify their investment in the Equity market, gold, bonds, currency, commodity segment, real estate, and fixed deposits. This way, the long-term consequences will be beneficial for the Indian Investors.
4. The studies suggest that despite geopolitical tension, India has outperformed. The Indian market is stable and the market has digested the current situation. After all forms of ups and downs, FII is interested in the Indian market. It clearly represents the future growth of the Indian market. Indian Stock market has been a great source of wealth creation for India as well for FIIs over a couple of decades. In support of the above-said statement, we would like to inform you that recently Japan has offered $42 billion in investment. Similarly, Russia offered discounted oil to India which again shows the trust of the world with India.
5. If Investors are confused due to market volatility, then they can start investing in mutual funds. It is a stable option with a higher amount of Interest. Investors can invest in mutual funds through monthly SIP (systematic Investment plan) or through Lumpsum.
As per Times of India, the Russian Market might be removed from MSCI/FTSE global indices. It will also lead to an increase in weightage for Indian equities which are directed towards higher flows. These are the signs investors are going to grow in the future run. As an expert, we would suggest taking the advantage of this time to obtain more profits in the future. You must also know that Ukraine -Russia conflict has effectively influenced the crude oil prices. Due to this change, the Reserve bank of India is re-thinking its policy normalization schedule which might affect inflation and interest rate.
Cheers to your Financial Journey!
Deepanshi Arora
(Financial Educator, Soft Skills Trainer, and Image Coach)
