How To Survive A Bear Market?

 

 While a continuously falling stock market may seem like doomsday, there are steps you can take to secure your investments

As share prices tumble down, it appears that the Indian stock market is in a strong bear grip. The BSE Sensex is down to 74,332 from its peak of 85,836 in September 2024. Similarly, the NSE Nifty 50 is down to 22,508 from its peak of 26,061 in September 2024. As global uncertainties prevail, many experts believe that the stock market could see further correction. To survive a bear market, here are some things you need to do.

Invest in risk-free instruments - For those who like to take risks, a falling stock market can be a good opportunity. Some experts believe that many equity shares are currently available at discounted prices and can fetch good returns when the stock market rebounds. However, if you have limited funds, it will be better to shift focus on low-risk investments such as high-interest savings accounts, fixed deposits and gold. You can also consider liquid mutual funds.

Choose defensive stocks - These are stocks that have limited impact from a bearish market. Some examples include FMCG (Fast Moving Consumer Goods), healthcare, pharmaceuticals, utilities, telecom, IT services, etc. With these stocks, you will have a better chance of surviving a bear market.

Right time to SIP - With a falling stock market, SIPs are currently available at discounted prices. It presents a good opportunity, especially if you are aiming for long-term gains. As prices are lower, you can buy more units with the funds you have.

Alternative investment options - To survive a bear market, you can consider options such as Gold ETFs. This will be suitable for folks who do not want the hassles associated with buying, storing and selling physical gold. Another option is to choose government securities (G-Secs) or AAA-rated corporate bonds. Real estate investment options can also be explored, as property prices are generally lower during times of economic slowdown.

Rebalance your portfolio - If your current portfolio is heavily leaning on small cap and mid-cap stocks, you need to shift to large-cap stocks. Large-cap stocks could make a faster recovery once the stock market rebounds. In comparison, small and mid-caps stocks can trap your investments over an extended period. You can also choose debt instruments.

Rethink IPOs - During a bear phase, businesses generally avoid launching IPOs. Even those that are launched may be listed at a discounted price. If you are targeting IPOs in a bear market, it is important to properly research the company's potential and growth prospects.

Have patience and stay resilient - If you look at historical data, it can be seen that the Indian stock market has always recovered after a bear phase. A good example is the 2008 crash when the Sensex fell by 52%. However, it had made a strong comeback by 2010. If you have blue-chips stocks, it will be better to hold them.

DISCLAIMER – This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult a SEBI-registered professional before making any investment decisions. Investments are subject to market risks.

source: newspatrolling.com