Year-End Special: ‘In five years or more, NIFTY has never lost money’ | Jobs Vox


As the year draws to a close, ETFual Funds spoke to mutual fund advisors and financial planners to find out what’s happening in the investment space. Today, we feature Rishabh Parakh, Founder, NRP Capital. He is also a Chartered Accountant and Personal Finance Professional. He is the author of “Financial Spirituality.”

What are your thoughts on the hits and misses of 2022? Or what investors did right or wrong in 2022?

The biggest ‘hit’ was the confidence of the Indian stock market, and the important factor was the high retail participation in the stock market. Markets around the world are falling, but the situation in India is different. The top gainers of the year have been banking stocks, especially PSU banks. In December, the Sensex hit a record high. Despite the dire global economic climate, the Sensex and Nifty 50 indices have risen over 7% in 2022, reflecting the resilience of the country’s retail investors. In fact, SIP contributions to mutual funds have grown to over Rs 13,000 crore.

In my opinion, the following are the significant mistakes made by most investors, especially new age investors.

  • Most investors who trade in stocks, cryptocurrencies and NFTs are trapped in these instruments due to greed, lack of financial planning, lack of risk assessment, and above all due to the undue influence of so-called finflueners and financial gurus in the media. While some are trustworthy, there are also many charlatans. A number of influencers offer a variety of financial advice on their channels, allowing investors to join in without knowing their risk exposure.
  • Stock market participants engage in inappropriate trading activity after viewing fake screenshots on social media networks.
  • If you look at the year to end, you will find that the returns of the Sensex have been led by certain stocks. In previous bull runs, for example last year, almost all sectors were green. Not the case this time. Many investors are caught in the stock market by investing in wrong sectors without proper analysis. In fact, stock market investors who invested in the IT industry lost a lot of money. Leading the current rally are banks and the financial sector.
  • What investors forget is to stick with financial products that don’t match their risk profile or time frame to achieve their financial goals.

The most common reason people make these mistakes is failure to develop a comprehensive financial plan that helps them understand which financial products to invest in to achieve their financial goals.

Also, what do you think will be the biggest surprise in 2022? It could be an event or category that performed brilliantly or performed poorly in 2022.

The biggest surprises were the war between Russia and Ukraine and the skyrocketing inflation that hit the world economy hard. Although we expected the inflation to be temporary, it turned out to be more permanent. The US stock market fell, especially the IT index, and interest rates rose sharply to control inflation.

Interestingly, the Indian stock market, although it has destroyed FIIs, and the global stock market in 2010 The gloomy performance of 2022, which fell sharply in 2022, was held up well. The positive thing is that the retail market participation is growing and the number of SIP books is increasing. Around 13,000 rupees. Many investors have maintained their SIPs and remained calm due to market volatility caused by global crises and interest rate hikes.

In the year By the end of 2022, India’s macroeconomic situation has improved. There is relief in crude oil prices, which have fallen to around $75 a barrel since peaking. Foreign institutional investors are also returning.

Your advice to investors, especially new investors.

Consider holding a long position in India.

Capital expenditure is increasing in industries, corporate profits in India are at a high level, and overall confidence is at a high level. It is predicted that the Indian economy, which is currently ranked 5th in the world, will move to the third position in the next 5-6 years. India’s GDP is expected to exceed $10 trillion in the next 9-10 years. In fact, the Indian stock market is likely to become the third largest in the world in the next 8-9 years.

In a span of five years or more, NIFTY has never lost money.

According to an NSE white paper, an investor with a time horizon of 5 years or more in the NIFTY 50 index has never lost money in the last 19 years since June 1999, based on intraday backtesting of the index’s performance. For 7 and 10 years, respectively, the NIFTY 50 index has returned more than 15% per annum, 48% per annum, and 60% of the time.

Knight Father 1996 1,107 points November 1995 Nifty took 17 years to reach 6,000 points but only 9 years to reach 12,000+ points. Nifty closed at 18420 after a 26-year hiatus, giving it a return of over 18 times.

And remember these important insights for building long-term wealth:

1. Build a well-diversified portfolio and adjust it regularly.

2. Put some dry powder on your hand.

3. Avoid timing the market.

4. Continue your SIPs regardless of market fluctuations.

5. Get rid of your bad investments while the market is at its peak, it’s a great time to do so.

And what mistakes should be avoided in 2023?

  1. Don’t Ignore Indian Stock Market – Regardless of the market ups and downs, don’t miss out on the great opportunity that our country has to offer through explosive growth that will drive stock market prices higher. To top it all off, we will see a significant increase in retail trade to propel this journey forward. The current SIP book of Rs 1,3000 crore may increase in future. So, if you don’t need money or don’t have a better option, don’t hold profits or wait for the right time to invest and stay out of the market for a long time. And always remember what Peter Lynch famously said: “Investors have lost more money trying to predict corrections than they have on actual corrections.”
  2. Avoid investing using an ineffective strategy, timing the market, relying on past performance for your decisions, and not diversifying your portfolio.
  3. Consider your investments in line with your goals. Avoid investing based on social media posts or reels because you can never be sure if they are ads or other types of content.
  4. Pay attention to the industries you invest in; As mentioned earlier, the IT sector triggered the last market rally and the current rally is led by the banking and financial sector, while the IT industry is in the red.
  5. You have to be careful where you invest your money; Alternatively, you can use mutual funds to avoid direct stock investing, which takes a lot of time and expertise.
  6. Check your account to see if you have an emergency fund; This is one lesson that covid has taught us all.

Your tips for investors to read, watch and listen.

The saying, “You are only the average of the five people you love” applies to what you read, watch, and listen to every day. More than necessary information is now available in all media, including online news portals, magazines, blogs, YouTube, social media and more. For this reason, it is important to follow the right channels. There are tons of YouTubers, Instagrammers, fin-fliers, and influencers out there, and some of them are worth following. However, you should be careful to avoid quacks and those who give false information and explanations.


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