5 Best Things to do in Volatile Stock Markets

Volatile markets - Guiding Torch

But don’t you think Volatility is the basic feature of equity markets, and all equity investors are expected to know it beforehand that in short-term there is the full possibility of them seeing their portfolio in RED?

Yesterday I got one query on NPS where the 36 years old investor was worried about his money as he has chosen Auto Investment approach in NPS and his portfolio is allocated 71% into equity. He is seeing his money going down every day which was making him impatient. He wanted me to suggest a suitable portfolio with less volatility.

And My answer was very simple, if you can’t see your portfolio into negative then you are not an equity material. Better to come out of Equity and go for debt instruments. (Read: What is Equity – Understand its true meaning)

But keep in mind that Debt also comes with interest rates risk so you may see your investment into RED in that allocation too.

Stock Markets keep testing the Patience of Investors. It pays only to those investors who stay with it through Thick and Thin. And since it gets impacted by lot many factors which are beyond anyone’s control, so what you can only do is to accept it as it is and design your strategy the way your goals and risk profile demands.

(In case you missed it, I wrote something on to preparing yourself for stock market fall)

The easy thing to do (as it seems) in volatile markets especially in downward markets is to sell your holdings and wait for it to settle down and then Re-enter, but it all looks possible only in Hindsight. You may find the reasons only when you post-mortem the happenings but cannot figure out in advance.

If you have done this before then consider yourself lucky, and if twice then consider yourself as double lucky. But this does not happen always.

There could be many reasons for this volatility. Sometimes it is due to International factors like currency , Interest rates, geo political tensions etc. and many times it could be domestic too like Specific company issue, or Interest rates or Corruption etc.

Still, if this downward trend worries you, below chart may help you gain some confidence, and then I have shared some pointers which you may follow to take advantage of and sail through today’s volatile markets scenario.

Volatile markets
Source: Tata Mutual fund

# Turn off the TV and Stop Reading Business Newspaper:

I am assuming that you are an Investor and not a Trader. And Investors do the research and design the strategy only at the beginning and not redo it at every new event.

Good Strategies can’t be made in a Noisy Environment. You have to be at peace and focused on your targets. Whereas TV and Newspapers just create Noise around, which does not let you make a wise decision.

They share information on every happening in the market and this is their job, but the problem comes when newspapers or TV channels turn themselves into advisors. And the problem doubles when in the search for FREE advice, you believe and act on that advice.

(Read: Conflict of Interest – Beware of It)

As shown in the chart above, events keep happening, some are taken positively and some negatively, but the ultimate direction of growing economy is only upwards. And if the Goal is to become a Developed economy by 2047, you can imagine the kind of growth we are talking about

Switching off the TV and not Reading Business papers, helps in avoiding Investment stress and anxiety, and you will not be tempted to look at your portfolio every now and then to make changes and blow it up.

Your Research should happen only at the time of making your Investment plan and while Reviewing it, which not be based only on the market movements, but your own goals, risk profile, etc.

If at all you want to be abreast of happenings in the economy, then better to read some good magazines or research papers, which don’t bother you on daily basis.

# Let Grow the SIPs:

In fact, review your cash flows and see if you can Increase the Sips.

Volatile times are the perfect time going for Rupee cost averaging. If you call yourself a SIP investor and do not participate in Volatile Markets then better not to waste time in Equity markets and stick to PPF and EPF kind of products.

Systematic investment plans meant for those investors who believe that they do not know which side markets will move and when. If markets have to move in one direction then NO SIP will be advantageous.

This strategy will pay only when you capture both sides of the markets well. (Read: Mutual funds at 100X Return)

Generally, investors are tempted to Increase their investments in rising markets as every day they see their money grow, but actually, it should happen the other way around. In the Downmarket, the investments should increase so as to gain more in the rising markets.

Volatile markets - let grow the SIPs

This makes the point to review the cash flow and see if there is any possibility to Increase the Investments.

# Rebalance your Asset Allocation:

When I say not to Redeem your investments in the down market then I also want you to do the rebalancing every time you see a big downfall or jump happens.

3-5% of volatility is a regular one, your SIPs will take care of it. But when you see the mid-cap index fall around 24% in a year-to-date return, and Small-cap to fall around 30%, this makes a point to review the asset allocation of the portfolio and see if there is any rebalancing requirement.

Rebalancing does not always mean going high on equity looking at its low levels. It should be as per the long-term Asset Allocation you have decided while writing your Investment plan.

# Review your Goals:

You must be thinking about what the market volatility has to do with the goals? Right?

See, if there are the goals that you are investing for and that goal is not the “Returns” then it is important for you to review the goals. Returns are the by-product which you will get when you follow the strategy so it can’t be a goal.

If your goal is arriving in the next 2-3 years, I believe you should take your money out, at least what is required to fund that goal should be into some safe investments now.

If you have plans to go on International vacation, then you may Plan for the places where the rupee is stronger, so you may spend lesser than required, and save on your expenses which can be used to increase your investments.

If you have a goal of sending your child for foreign education, then this is the time for you to review the strategy to manage the “what if” of the weakening rupee at the time of your goal years.

# Better Concentrate on Your Income:

There may be some other reasons for the market fall, but if it extends it may have some spillover impact also which may bother your Income profile.

Your Success depends on your Present income (Investment money) and not only on the investment returns which are not in your control. You have to ensure that your Present income should continue and keep growing at a rate higher than inflation.

Money makes money. And you will grow when you pass through all the hiccups and participate in all market scenarios, for which you need to have consistent and regular Income.

You should rather spend more time in your Job and work on adding onto your expertise and Income, than gluing yourself to TVs, Mobile, and your portfolios, and keep worrying or excited about where markets are moving.

You may see many positives happenings in the background but would that secure your Job or income, not sure. If the dollar keeps rising, how will that impact your Job and Inflation in India, and thus India’s interest rates and your EMIs?

The idea is not to scare you but make you aware and nudge you to take stock of the things as to where you stand and how would you deal with a Distress like situation. Do the stress test in your personal finances.


You Invest for your goals, you strategize to be at Peace, you select investments wisely so not to be bothered about its management, you have done your best to feel secure about your Financial Future. Then What is Bothering you Now?

Ups and downs are part of life and also for the equity markets. You should not lose patience and better to stay organized.

Stay focused on your goals and keep following the process, this is the only best thing that you can do in the volatile markets.

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He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER, Chartered Trust and Estate Planner and SEBI Registered Investment adviser. He has authored a Book in collaboration with CNBC TV 18 Network 18 bestesellers , tiltled "The Art of Being Good with Money". An ex banker , having a 17+ years of long experience in financial services industry he manages clients across the globe. He is a regular contributor to various leading Media and publication houses. He has written for Moneycontrol, Dainik bhaskar, Business standard, Live mint, Indian Express, The Tribune etc. He has also appeared in TV shows by Zee Business, ET Money, National Door darshan, Jagran Online. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at [email protected]


  1. May add:
    1.Arbitrage funds for short duration is expected to do better during volatile funds. You may like to mention this.

    2. Smarter SIPs (Rf. funds India’s new service) and choosing to save more in specific MF based on market cap: e.g., right now in 2019 I half, large cap funds better.

  2. 1. May consider Arbitrage funds to deploy short-term funds, and while waiting for better opportunity to invest.
    2. May go for Smart SIPs – ref. Funds India’s new offering: Depending on market, investment in debt and equity varies.
    3. May consider fine-tuning investment within different funds – differing market cap, or opportunity/dynamic funds, etc., if one feels confident. Example: In I half of 2019, more investment in large caps if conservative, than in mid-cap funds.


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