How embracing volatility is the path to wealth creation on Dalal Street
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In the wake of a prosperous CY2023, concerns about a potential market correction surfaced among investors, casting a shadow over CY2024. Overvaluation in some segments of the stocks added to investors’ worries. Some mutual fund houses decided to restrict the fund flows into schemes focusing on small-cap stocks, which in turn played on the investors’ sentiment. The proactive approach of the regulator by asking the mutual funds to carry out a stress test, which acts as a timely nudge. The Reserve Bank of India also stepped in with proactive intervention in non-banking finance companies and payment businesses. All these have served the investors by bringing down the valuation premium the small and mid-cap stocks enjoyed over the Nifty50 index. Volatility, an inherent element of the market, poses a dilemma for inexperienced investors. However, whether volatility serves as a risk or an opportunity depends on the mindset of the investor, partic...