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Any strong tide in the market, like the one we are experiencing now, leads all the boats to rise.

The Indian market continues to touch unprecedented highs. NSE Nifty is comfortably placed above 18,300, while BSE Sensex is trading above 61,000. The rally is ably supported by a strong recovery in the economy post-second COVID-19 wave, faster pace of vaccination and the waning threat of a third wave.

The government’s pro-business intent has added to the comfort of the market. Completion of Air India’s privatisation has raised the expectations about a faster resolution of the remaining pipeline for FY22.

No doubt, the market is buoyant. While the investors are enjoying the fruits of staying patient through turbulent times, current exuberance has led to stretched valuations and inflated equity assets. And, the situation can get tricky from here for retail investors if enough caution is not maintained.

Here’s a list of dos and don’ts that investors must follow to better prepare themselves when the situation turns hostile.

1) Get Rid of Your Duds

Any strong tide in the market, like the one we are experiencing now, leads all the boats to rise. It is a chance for investors to rectify their old mistakes and get out of fundamentally weak or underperforming stocks.

2) Stick to Quality

While using the rally to book out from your weak stocks could be a wise decision, it may not be too wise to sell out your winners. It is important for investors to stay put in quality stocks for the long term and use corrections to add more.

3) Don’t Try to Time The Market

It is next to impossible to time market movements. Hence, investors must stay invested in the market for long term wealth creation. Rather than liquidating your complete portfolio when the market is at an all-time high, it is important to focus on diversification to protect the downside of your investment.

4) Stay Disciplined With Your Investments

An all-time high market requires investors to stay cautious. However, this is no reason to stop investing. When the risk-reward ratio is not in favour, investors can adopt the SIP style of investment to avoid large exposure to a single stock. Rather, investors should diversify their funds into different stocks and sectors.

5) Set Goals

Without having a goal, your investment journey is likely to lose momentum. Hence, for any investment plan to stay on course, it is important to set a goal and then work towards achieving it.

6) Avoid Chasing Tips, Develop Your Research

When every stock is going up, several self-proclaimed experts start bombarding with stock tips. It is in the best of interest for investors to avoid such tips received by friends, brokers or over social media platforms.

Such tips can help you during a bull run, but it is of paramount importance to do your research and develop your understanding to succeed in the market over the long term.

7) Form a Strategy and Stick to It

An investor can approach the stock market in several ways, all the strategies can fall under one of three basic styles – value investing, growth investing or index investing. Market at different times favours different styles of investing.

Investors must determine the strategy best suited to them, keeping their understanding and aptitude in mind, and should avoid shifting their styles as per the market fluctuations.

8) Avoid Speculation

Investors must cut the noise and be able to segregate between concrete news and speculation. Speculation creates a false narrative, and acting on it often leads to disaster.

9) Seek Professional Help

Seek help from financial planners or advisors who can professionally manage your money by charging certain fees. Professional portfolio management is a fast developing industry in India, and investors should take advantage of their services to achieve their long term wealth creation goals.

10) Reinvest Excessive Returns

Reinvesting your returns or dividends back into your portfolio vastly increases returns. Hence, unless you need to withdraw your investment for specific needs, reinvestment helps in faster wealth accumulation over the long term.