These may seem like worrying times for some since global and domestic stock prices are witnessing a correction. But what seems like a problem fits well within our four key frameworks for equity investing—flow, trigger, valuation, and sentiment. And these principles can be your guiding light in making the right portfolio moves in the year ahead.
The first is fund flows. For foreign investors, a key component that determines their asset allocation toward global asset classes has changed since 2012-13—oil prices have plunged to levels of around $30 per barrel. Since foreign institutional investors (FIIs) are selling across the globe, domestic markets have been affected. But do keep in mind that this selling has nothing to do with the fundamentals of the Indian economy, which remain favourable. It’s when this type of selling happens that emergency cash and quick money has to be raised. One should not look at these times as panic selling moments, but instead as opportunity-buying moments.
