Market fall: You can sell out & stay in cash

With BSE sensex now down nearly a thousand from its all-time peak at 15,869 just seven sessions ago, one question that is paramount in the minds of most investors is "what to do now?"

Of course there are fund managers and market analysts who will say there's nothing fundamentally wrong with the India story, its economic growth engine won't be derailed, so invest for the long-term and stay invested, and all that have been said umpteen number of times.

But as one top official at a domestic broking house said, "after such falls, it pains tremendously when you get your portfolio statement and find that you are down about 10% for no fault of yours".

So, if you believe cash is king, sell now. Get out of market and stay in cash. As the index nears new peaks, one should be cautious and on their toes. "At the first signs of jitters, (sell out) and be in cash," said Ashu Madan, national head-retail equity, Religare Securities. "One shouldn’t be a passive investor when indices are at all-time highs," Madan added.

If some of your stocks have done well, book profit and stay in cash, said Arun Kejriwal, director, KRIS, an investment research and advisory firm. "However, if your stocks have not done well and you believe it could do well, stay invested and keep a strict stop loss. In the worst situation, if your stocks fall below your pre-fixed level, then exit. It's time to take calculated risks," Kejriwal added.

But if you are used to looking at your portfolio only occasionally and jitters like the current ones do not matter much because you are invested for two, three, four years or more, then just ignore the market crash.

Now for those who trade on technical charts. Technically, the Nifty, currently at 4,343, is unlikely to show any major up move unless it goes past 4,500-4,550 level, chartists said. "On the downside, the Nifty (Aug) Futures have a very good support at 4,180-4,122 region," said Gurudatta Dhanokar, technical analyst at Almondz Global Securities.

On Wednesday, Nifty August Futures closed at 4,288. But, lately leading indices have been showing a zig zag pattern, a rare movement involving highs and lows. A zig zag movement more often than not lead to trend reversal, chartists warned.