Systematic Investment Plan (SIP’s) and its importance for you: All you need to know

Jeevan Kumar, Head of Investment Advisory, Geojit Financial Services says that one consistent characteristic of stock market is volatility as they say it is a beast with its own mind and one way to make the best of it is follow the advice of market veterans who say “Buy on dips and sell on rallies”. But investors, especially new investors get jittery and anxious when the markets fall, sometimes even if it is for a short duration. They panic and sell their stocks and SIP investors, stopping their investments.
 
This is something that happened recently to many of the investors who stopped their SIPs when the markets crashed to 26,000 in March from an all-time high level of 42,000 in January, fearing that they will lose money. Had they continued with their investments and their SIPs, today they would be a lot richer. He has noticed that often, later when the market rallies, many investors start their SIPs because they don't want to miss the Bull Run. They end up buying at higher valuations due to FOMO (Fear of Missing Out).

Ajit Mishra, VP - Research, Religare Broking Markets witnessed a rebound and ended with gains of 1%, after the sharp decline in the previous session. It opened with an uptick amid mixed global cues and hovered in a range in the first half. However, healthy buying in the IT and pharma majors combined with some recovery in the other sectors helped the benchmark to pare intraday losses and settle around the day’s high as well. Consequently, the Nifty ended around 13,466 levels; up by 1%. The broader markets too witnessed recovery and both the midcap and smallcap index posted decent gains.

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Religare Broking expects volatility to remain high in the following sessions too. Traders should proactively manage their positions and avoid unnecessary overnight risk. Defensive pack viz. IT, pharma and FMCG are looking comparatively strong and should be preferred for buying trades in case the rebound extends further. On the flip side, banking and metal may trade subdued so plan your positions accordingly.