Investing can sometimes feel like being stuck in a traffic jam—you’re unsure whether to go ahead, take a U-turn, or stay still. The Indian stock market is no different. It can be thrilling during bull runs and terrifying during crashes. So, what should investors do? Buy, Hold, or Say Bye?
Before jumping to conclusions, let’s examine market patterns and investor behaviour.
📉📈 A Quick Look at India’s Market Ups and Downs
The Indian stock market has experienced numerous cycles of euphoria and panic. Here’s a snapshot of some notable milestones that define market behaviour over the last three decades:
🔺 Major Highs
- 2003–2007 Bull Run: Following the IT boom and economic liberalisation, India witnessed rapid GDP growth. The Sensex rose from 3,000 to over 20,000, making millionaires out of patient investors.
- 2014–2017 Market Rally: Post the Modi government’s first win, markets surged on hopes of reforms, ease of doing business, and FDI growth. This was also a golden era for Systematic Investment Plans (SIPs) in mutual funds.
- 2020–2021 Post-COVID Recovery: After a sudden crash in March 2020, markets hit all-time highs by late 2021. Retail participation boomed, and digital economy stocks soared.
🔻 Major Lows
- 1992 Harshad Mehta Scam: The stock market bubble burst when manipulative practices were exposed. This marked the start of tighter SEBI regulations.
- The 2008 Global Financial Crisis: The Sensex dropped from 21,000 to 9,000 in a matter of months due to a global credit crisis, although it recovered within a couple of years.
- March 2020 COVID Crash: Nifty fell over 35% in just a few weeks due to global panic. But those who stayed invested saw a strong recovery.
👉 Lesson: History shows that markets always recover. Long-term gains often follow short-term falls.
🟢 When Should You Say “Buy”?
Investors should consider buying during specific situations when conditions are favourable for long-term wealth creation:
✅ Market Correction, Not Collapse
Not every market dip is a danger signal. Corrections of 5–10% are healthy and normal. These phases often offer attractive entry points for fundamentally strong stocks and mutual funds.
Example: If a top-rated large-cap mutual fund experiences a decline in its NAV due to market volatility, you can accumulate more units at a lower cost through SIP or lump sum investments.
✅ You Have Long-Term Goals
If you’re investing for retirement, your child’s education, or long-term wealth creation (10+ years), temporary market dips should not cause you concern. These are times when buying more can reduce your average cost and boost compounding.
✅ Fundamentals Are Strong
When the underlying stock or mutual fund is financially healthy, with low debt, consistent earnings, and good management, any price drop is a buying opportunity. A strong foundation ensures long-term resilience and growth.
✅ Your Asset Allocation Is Skewed
Suppose you planned for a 60:40 equity-debt portfolio, but due to a market fall, your equity is now at 50%. This is an ideal time to buy equities and rebalance your portfolio to maintain your risk-return ratio.
🔴 When Should You Say “Bye”?
Saying “bye” doesn’t always mean panic selling. It can also refer to profit booking, risk management, or adjusting your strategy.
❌ Goals Are Nearing
If your financial goal is just 1–2 years away, it’s risky to keep money in equities. Markets can be volatile in the short term. It’s better to shift that money to low-risk debt funds, fixed deposits, or liquid funds to protect your capital.
❌ Poor Fundamentals
If the company or mutual fund you’re holding is consistently underperforming, has weak financials, or lacks a clear business strategy, it may be wise to exit and reinvest in better options.
Example: A sectoral fund focused on telecom or PSU banks that has failed to generate returns over multiple years despite sector improvements.
❌ You’re Overexposed
Excessive exposure to a single sector (e.g., technology or pharmaceuticals) or a single stock increases your portfolio risk. If one investment has grown to 25–30% of your portfolio due to a rally, consider trimming it and diversifying your portfolio.
❌ You’re Reacting Emotionally
If you’re selling just because everyone is talking about a crash or you’re afraid of short-term losses, pause and evaluate. Emotional decisions often lead to regret when the market rebounds.
🟡 Don’t Forget the Third Option: Hold!
Sometimes, the smartest action is no action. If your investments are fundamentally sound, aligned to your goals, and your asset allocation is in place, it’s best to stay invested and ride the market wave.
Holding through volatility helps you benefit from rupee cost averaging (via SIPs) and compounding over time.
🔧 Tips to Make Better Buy-or-Bye Decisions
- 🎯 Let Goals Drive Strategy: Don’t let market noise influence your decisions. Stick to your investment roadmap.
- 📊 Invest Systematically: SIPs help you average out costs and reduce timing risks.
- 🔄 Review and Rebalance: Check your portfolio at least once every 6–12 months to ensure it remains aligned with your goals.
- 🧠 Avoid Herd Mentality: Just because everyone is buying or selling doesn’t mean you should too.
- 📞 Seek Professional Help: Consult a financial advisor for objective, personalised guidance.
🧭 Conclusion: Strategy Over Sentiment
The markets will always fluctuate, and headlines will always be dramatic. The key is to stay grounded in your financial goals and act logically.
- ✅ Say “Buy” when opportunities align with your long-term goals.
- ❌ Say “Bye” when risk, poor performance, or nearing goals demand a shift.
- 🟡 Say “Hold” when everything is on track and the noise is temporary.
🤝 Still Unsure? Let Us Help You
📞 Contact VSJ FinMart today for personalised investment guidance.
We offer a complimentary portfolio review of your existing mutual fund portfolio and help you track all your mutual fund investments in one place.
👉 www.assetplus.in/mfd/ARN-319377