- Do you have any perception about where the markets are headed in next 3-6-12 months?
- If you do have slightest indication then Do you have a plan?
- Just having a plan is NOT enough but DO you know when and how to execute it?
If you have been following our blog then by now you should have some idea about market direction as well as a rough plan. If you are new to this site then don't worry, keep reading along and you will understand....
As expected at the beginning of this year, we are now experiencing possible topping pattern. Market may continue to remain in a very wide range (5600-6300) with lot of volatile action. The important thing for us is to remain calm and NOT get caught in all the noise yet be patient. In coming weeks/months, market may drop below MA(100) and also MA(200) quickly, possibly try to stabilize and stage a snap back rally above MA(200), MA(100). However, we believe that the snap back will be short lived and we shall see eventual fate of this market. This entire episode could take anywhere from 3-6 months and we shall get plenty of opportunity along with warning signs to exit the market. The KEY is to have a plan & execute it appropriately as we see signs of trouble.
What does this mean for our Investments?
- Mutual Funds - Stay invested as long as Nifty remains above MA(100) or possibly MA(200) line. Remember, we DO NOT have to exit at specific date or time but need to have a sense of approximate timing to exit. But what do we do we the money once we are out of the market? Well, one can start looking at good rated debt/bond funds or may be FDs or ETFs (such as liquidBEES) or simply stay in cash.
- Stocks - If market changes its course then it would be wise to stay in cash or have strict STOP LIMIT on our open positions. Preservation of capital should be our TOP priority.
Market still bullish yet be cautious...