Huge upside opportunities - Low downside risk

With sensex trading around 9000 level, the downside risk from here onwards may be limited. Perhaps we may have reached the near bottom. The economic health of the country remains in good shape .The opportunity to gain from here onwards is huge. We may clock higher growth on the investment made at the current levels. We in the past have seen strong market performances after notable lows. A quick recap of those performances during the last 18 years,

The above table analyses the performance of investments made after steep falls of the BSE Sensex. Returns under 1 year are absolute and returns over 1 year are annualized.

As is clearly seen from the above table, buying equities when they have corrected substantially from peaks, has proved to be an extremely profitable proposition for investors.

A quote by Peter Lynch "I've found that when the market's going down and you buy funds wisely, at some time in the future, you will be happy. You wont get there by reading.'Now it's time to buy'. These things never go off that way".

2. Opportunity to buy at low

It is extremely difficult to go against the crowd – to buy when everyone else is selling and sell when everyone is buying. Markets quite often or most of the time do not reflect this behavior. However a falling market offers common investors a level which he / she could have wished for quite long. It's the time to buy low, buy attractive and put yourself in a better position to outperform the broader market.

A quote befitting to the position by Warren Buffet - "Be greedy when others are fearful and be fearful when others are greedy

3. Chance to buy value, not the market trends or outlook

A wise investor knows that it is the individual stock that determines the market, not the vice versa. Too many investors focus on market trends and economic outlook. But there are individual stocks / investment which can rise in a bear market as well. The  current market offer many value offers for those who are able to identify. So make the most of the chance.

4. Use volatility to your advantage

Volatility is seen as negative - at least by majority of investors. However smart investors welcome it. If volatility results in a stock decline and your investment methodology are sound then you either buy more or sit tight while the gap between market price and intrinsic value narrows. One needs to beat his / her emotions and stick to well thought out plan.

The famous investor Benjamin Graham illustrated the behavior of the market with the following quote: "In the short run the market is a voting machine.  In the long run the market is a weighing machine

5. Occasion to build a defensive portfolio

In light of the recent volatility many investors seem concerned about building portfolios . However this is an opportune time to build a defensive portfolio for a life time. One can short list the investment option which stands high on sustainability factor. In simpler words insulation or resilience from price gyrations.  Portfolio of this nature may tend to resist tough market cycles and investors may gain more on account of this.

6. India's most diversified asset allocation Fund

UTI Wealth builder Fund - Series II brings a unique combination built up of traditional as well as non traditional assets by investing in Equities, Debt and Gold. This not only brings diversification at a lower cost but also imparts much needed stability to the portfolio. The low correlation of gold to equity returns would help in optimizing the risk - return profile of the fund. |

With current market uncertainties, investors may find a safe haven in UTI Wealth Builder Fund - Series II.

7. Use the NFO route for prudent deployment of funds

NFO money can be smartly deployed at opportune times by the fund manager. There is no time limit by which the funds have to be invested into. The fund manager has flexibility in picking up smart investment opportunities over a longer period of time and thus enhances the return potential of the portfolio

The above contents are based on internal views and for private consumption only. Mutual Fund investments are subject to market risks. Pl read the offer document before investing.