Looking to enter the market now? Here's what experts suggest

New Delhi: Amid rising volatility in financial markets, the days of easy money are apparently over. Investors need to rebalance their portfolios according to their risk appetite.

Market experts believe that the latest correction in the equity market gives a meaningful entry point to investors. They also suggest investors allocate funds aimed to diversify their portfolios.

Domestic equity markets have seen a sharp correction in the last few weeks, following the geopolitical uncertainty, rate hikes and rising inflationary worries.

Yash Gupta, Equity Research Analyst at Angel One, said that Nifty is trading at a price to earnings of 20x and dividend yields of 1.3 percent which is near average of the last 5 years, with an advice to the investors to remain invested.

"Long term investors can look to invest 50 per cent of new capital in a diversified portfolio of margin and midcaps stocks or even they can look to invest via Nifty and Nifty Midcap 100 ETF," he added.

Portfolio allocation depends on multiple factors including age, risk profile, investment horizon and more. One should avoid keeping all eggs in one basket, said the portfolio managers.

"Young investors should have equity allocation of 60-75 per cent; debt fund and Gold of 20 per cent, '' Gupta from Ange One said. "On the other hand, old investors should look at equity allocation of less than 50 per cent."

Market experts said that existing investors should stay invested in the current market as volatility is expected to recede in the next couple of quarters as clarity on inflation and interest rates emerges and markets adjust to the new reality.

With recent market corrections equity valuations have become relatively attractive and incremental investments can be made into pure equity funds, said Niranjan Avasthi, Head – Product, Marketing Digital Business, Edelweiss Mutual Funds.

"While exact asset allocation is subject to an individual's risk profile and goals, currently one can turn overweight on equities in the portfolio compared to other asset classes," he added.

Market analysts suggest that retail investors should avoid any panic selling or impulsive buying. They advise to stick with SIP investments. One should stick to the investment and asset allocation for the longer run, they added.

Amit Vyas, Head -Products Research, Equirus Wealth said that investors should follow their respective asset allocation as that's what helps deliver the returns over a longer period of time. Timing an asset class should be avoided.

"There are meaningful corrections in equity markets that serve as an entry point for a 5 year plus investor," he added. "The returns are never linear in equity markets and one has to be patient, avoiding impulsive decision making in fear or panic."

Market players said that portfolio diversification is the holy grail to investing and should be at the heart of any portfolio construction. Every asset class plays a meaningful role in the portfolio over a longer time horizon.

Creating an ideal mix of equity, fixed income and gold are a function of what are the financial milestones which one wants to achieve over the short,medium or long term, said Vyas from Equirius Wealth suggesting investors to allocate capital after their own risk assessment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)