Roadmap For Market Opportunities in 2022 : Key Learning From 2021

As the year ends, the markets have given a tremendous return. The year 2021 started with Nifty50 at 14000 Levels and has reached at the level of 17300 Levels. This means a return of 19% approximately. However the all time high was 18600 which means approximately 25% return. Thus the market has been swinging like a pendulum for the year 2021. There were many major falls and three unstoppable bull rallies. However at the end of the year the markets managed to give out new highs and even roll out bulk returns. 

If anyone had started investing in 2021, the major or the key investment modes would be IPOs and Equity. Other modes of investment haven’t been more active for the money markets. These types gave away maximum returns which even went into three figures on some occasions. Hence the mindset of people or new beginners would be focussed towards the IPO and Equity based trading and investing. However the scenario is going to be different for the year 2022. 

One thing which is quite sure that the market will definitely render 15% returns at any point of the year. This assumption can be taken given the historical market trend. Hence the investment into index or index funds can be a game changer in 2022. As per the analysis of major firms the Nifty50 is going to touch the 21000 levels in 2022. Thus the benchmark has been set for the investors and hence the focus should not be on short term earrings from IPO rather it should be on the indexes in 2022. 

Paradigm Shift

The mindset of people has been deeply hampered by the unending bull runs of the market rally in 2021. Even the lows of March 2020 (7000 Range) and the Highs close to 18600 show a difference of 11000 Points roughly. Thus people have faced a very volatile market in the past 2 years. Hence the general pattern of investors would be focused on Nifty50 Stocks. But remember that it was a dreadful bloodbath which discounted the prices of every stock by 50% and hence a correction was bound to happen. However the brief of the matter is focusing on Nifty50 Stocks may give you a stable 10% to 15% return per year. But on the other hand looking out for opportunities in upcoming potential segments, penny and Mid Cap stocks can possibly increase the return percentage in your favour.

As explained in previous blogs as well the stocks such as IRCTC, IEX were the major gainers in the bull run and not Reliance and TCS. Hence for better returns one has to wide spread his or her investing approach and take more risk.

Funds and Other Modes of Investments

The recent times display that the market has been highly volatile and hence one has to compulsorily balance his or her portfolio so that the losses get cut short in an event of market fall. If a person selects his or her stocks individually somewhere the invested amount is going to be an obstacle to freely disperse the risk across sectors. The reason is there is a cap limit on the amount of investment available for an individual. There are two solutions to this problem.

First is to approach Mutual Funds and the second one is to look into SmallCase. Smallcase is a mode of investment into various funds designed for specific purposes. Hence one can freely select his or her fund and invest into the same in the form of SIPs or Lump Sum as well. There is also an option to create your own small case and use it for investment purposes. Hence balancing the needs for individuals and also solving the liquidity issue.

Approach Diversification

The above mentioned can be a new approach to adopt in the upcoming year along with Gold, Real estate and money market. Also as per the market trend it is advisable to change the basic formula for this year. The formula of 50:30:20 for spending on needs, fulfilling wants and pursuing investments in respective proportions. The formula can be altered definitely if one has excess resources of income. However, let’s diversify the 20% of investments.

Out of that one has to definitely adopt the SGB mode of gold investment. Hence from the 100% of investing – 20% can be given into the same. 10% from the same can be utilised for any further new investment modes such as NFT and Crypto. From the remaining 70% that are left for money markets, one can further diversify the same into Equities and Mutual Funds. The reason is the Equity market looks good but stock selection needs to be accurate to average out the returns to 15% in a year. Hence Mutual Funds can be added into the portfolio for 25%. The rest of 45% can be invested into equities directly. 

This approach is considered given the major learning from 2021. Most of the mutual funds gave around 40% returns on average whereas Nifty50 gave returns around 25% at maximum level. Hence diversify your modes of investment, just be a lot patient and let compounding pursue its job. 

Do remember for any investment queries and investment opportunities INVESTALLIGN is always there to assist you.