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How to Ride This Market Volatility in the Difficult

  May 1,2022

My Dear Investors,

You might have heard from every quarter in myriad ways about the COVID pandemic and how it swaggered from a medical crisis to market crisis causing an avalanche of seismic reactions in this already shaking economy. Enough of discussing the panic, in fact, panic is the new pandemic now; let’s use our cerebral fissures amidst this social fissure to tackle this tsunami time than just to crib over it.

You all would have heard this

Don’t go through the difficult times

But grow through them

It was spoken by Thomas Alva Edison to his child when his factory caught in a fire mishap – all perished when he has to restart every bit of thing all over again. Such is his determination and tenacity and rest are history.

Similarly, Covid 19 screwed every aspect of life and it challenges our earlier routine. While we remain muted and accept things (even it is beneficial or not) as it shapes out, you as an investor have full liberty to bombard your consultant with all the questions popping in your mind on your investment. Here I am, not only as your shock absorber but willing to fish out solutions for you from the puddle of problems. This timely act at not so great times is the need of the hour.

As long as something can rise more than the fall we don’t need to worry much. If you look at the last 41 years of Sensex, it has fallen 14 times and rose 27 times. There indeed were falls but were less compared to the rises.

Let us see what happened in 2020.

At the beginning of this year, Sensex was 41,306 and it reaches 41,952 on 14th January on the day of Pongal and plummeted to 25,981 on 23rd March 2020. This is a whopping 38% fall in 70 days, but it recovered nearly 30% in 35 days.


1/1/2020 30/4/2020 Fall in % 23/3/2020 30/4/2020 Rise in%
BSE Sensex  41,306  33,717 -18.37% 25,981  33,717 29.78%
BSE Midcap 14,998  12,013 -19.90% 9,711


BSE Small cap  13,786  11,101 -19.48%   8,872 11,101 25.12%

What one needs to understand here is that market rises more than the fall. If the market falls from 100 to 50 then the fall rate is 50% but to regain its original level it has to improve by 100%, which means it is moving from 50 to 100%. Though it took 70 days to fall 38%, it took only 35 days to rise by 30%.

The purpose of this illustration is to inform you that the market will go up immediately, answer is NO, which nobody can predict. One can just hope that this should be the darkest phase before the dark, and the morning light is seemingly at sight. I as an investor and as a financial consultant would always say, as far as we keep our investment horizon as the long term, there is a possibility of huge growth.

Like life, investing is also a journey which cannot be smooth always has its own share of ups and down with too many controllable & uncontrollable challenges. Let’s develop the maturity to repel the wrong things and ensure to hold to the positive memories in the end which very well can be applied to the MF investments too.

At this juncture, let’s not confine ourselves to a particular segment be it large, mid, and small. When it comes to risk all are equal while the returns factor in mid & small is superior. If you an existing investor under mid & small, stay put in it in and no need to move to large- cap. Keep adding your investments, and if you are little uncomfortable with volatility then consider Multicap or large & mid or balanced funds

I reiterate to focus on your physical, mental & financial fitness rather than dwelling on the problems, like how we fix our car when it conks out, to cut-short our loss let’s take some effort to renovate our portfolio instead of merely watching the market so that it does not lose its sheen.

p.s. Purpose of the mail is not advising you to invest aggressively, it is more for you to understand how the market works. If you have surplus to meet next 6 months expenses, then you can plan for a staggered investment till the lock-down ends.

Fortunately Yours,
B. Padmanaban

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