Happy Holi from NTA

Holi is one of the most significant festivals of India. The colours add a lively feel to the festivity and tradition. The Stock Market is also very relatable to the festival of Holi. Even though markets have only two prominent colours that are red and green, yet there is a relation between the two. In fact, in this article, we shall understand how Holi and stock markets have a link with each other from investors and traders point of view.

Modi Boost Up GDP

Before moving ahead let us have a look at the recent GDP data so that the investors and traders can take the right future calls on the basis of India economy. In fact, the recent data shows that Indian economy is recovering well after demonetisation and GST implication. The Gross Domestic Product (GDP) grew at 7.2% in October – December against 6.5% in the previous quarter and 6.8% in the same period of the last year. The sectors that performed well are service, agriculture and manufacturing. If the same performance continues in the coming quarters, we can expect a very good growth of the Indian economy and ultimately rise in the stock market.

Relation between Stock Market and Holi

The investors and traders in the stock market are always looking for opportunities to make money. One mistake they often make is that they put all the eggs in one basket. To put it another way, the traders and investors put all their money in a single stock. Therefore, just as Holi has different colours, the traders and investors must put their money in different stocks.

Let us have a look at the benefits of diversification in the stock market.

Benefits of Diversification for Traders and Investors

• Risk Reduction

Just like Holi has a variety of colours. Similarly, having multiple stocks from different sectors protects the intraday traders as well as long-term investors from the risk of capital erosion. A portfolio with no diversification will always depend on one or two stocks. Therefore, a fall in those stocks can lead to big losses. Therefore, the investors and traders must add stocks from multiple sectors to protect a fall in one sector with arise in another sector.

• Adjustment

As we know, that celebration of Holi is done with colours and water. The right amount of water and colours are mixed and adjusted together to colour people. Similarly, a diversified portfolio can be adjusted at any point in time. If any stock mix is not fine, the investor or trader can change the shares in their portfolio.

• Preserves Capital

The celebration of Holi is incomplete without water. However, looking at the water shortage in different parts of the country it must be used judiciously. Water preservation is essential for the survival of humankind. Similarly, the capital in the stock market must be preserved as well. This is possible only if there is diversification of the portfolio. In fact, it would not be wrong to say that diversification of the portfolio is an investment strategy for the investors and traders.

• Hedges Portfolio

During the festival of Holi, people often tend to protect their skin from harmful side effects of colours. The measures can be applying oil, cream and so on. Similarly, diversification hedges the portfolio. The diversification of portfolio helps in giving good returns not only in the bull run of the market but also in the bear run. To put it another way, if one sector performs badly during the bear run in the market, another sector performs well by giving good returns. Thus, the portfolio hedges and the investor or trader can make positive returns in any sort of market.

After reading the above points, it must be clear that making money in the stock market is not an easy task. The money in the stock market erodes just like water in Holi festival. The diversification of the portfolio is the basic and primary step for any trader and investor in the stock market. With the right strategy in place, the investors and traders can make good money in the stock market.

About Us

Nifty Trading Academy is one of the leaders in providing education to the investors and traders in the stock market.  At our academy, we give the investors and traders the understanding of the technical charts of the stocks.  By gaining our knowledge, the traders can become successful intraday traders and investors can become successful in the long run. You can reach or contact us at our academy through phone or email. We will be glad to serve you and resolve your queries.

The post Stock Market and Holi appeared first on NTA.