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The benchmark indices of the Indian stock market—Sensex and Nifty—have fallen by about 4% each in the past one week. Have you been worried about its impact on your portfolio? No wonder, the pain of loss is said to be twice as powerful as the pleasure of gain.

If you are a long-term investor, fortunately, there is not much reason to fret. Experts suggest that investors should stay calm, evaluate the holdings, stagger the investments and always stick to asset allocation.

Stay calm and evaluate: Watching markets fall could be unsettling for most investors, especially to those who entered the stock market in 2020 and afterwards. But volatility is an inherent nature of the equity markets.

“The correction is only natural, especially after such a phenomenal rise in the markets in the last few months," said Santosh Joseph, founder and managing partner, Germinate Investor Services, LLP.

Experts suggest that existing investors can continue to be invested in the market.

“Investment behaviour should not be influenced by market cycles," said Vinay Ahuja, executive director, IIFL Wealth. He said that the first thing investors need to do is be disciplined and calmly assess the portfolio. “If the price of a stock has fallen, evaluate whether it still has long-term growth potential. If it does, then hold on to it," he said.

Stagger your investment: Since timing the market is not possible, experts advise that the new investments in equity can be in a staggered manner. That is, instead of investing a lump sum amount in equity at one go, one can consider investing over the next few weeks or months.

Joseph said, “The simplest thing like staggering becomes the most profound strategy in a volatile market like this." Staggering helps in taking out the risk from markets, he said.

Vinay suggests a step-wise approach for fresh equity investments. First, look at the list of potential investments. Next, see if they are now available at better valuations and question if the growth is intact. If yes for all, then go ahead and start investing in them in a staggered manner.

Stick to asset allocation: Asset allocation has been a time-tested method to contain losses in any market scenario as it balances risk and reward aspects of the portfolio. It is nothing but apportioning a portfolio’s assets across asset classes according to an individual’s goals, risk tolerance and investment horizon.

Nitin Shanbhag, head of investment products, Motilal Oswal Wealth, said, “It is important to adhere to asset allocation rather than getting swayed with heightened short-term volatility, since even the previous bull market of 2003-07 had multiple phases of corrections."

He pointed out that investors should go through their own investment charter to check whether their investment portfolio allocation is in line with their long-term goals.

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