By now it’s a known fact that we are in midst of unprecedented global turmoil. India is surely not insulated from whatever is happening around the globe. To add to that we have our own local problems like high inflation, subdued IIP numbers, which in turn have posed a big threat to our GDP growth. Stock markets are bound to react to whatever is happening around the globe and there is no surprise that our own stock index has shaved off almost 50% from its peak much in line with other indexes around the world. Such is the retail investor psyche that these same buyers who were queuing up to buy at 21,000 odd levels now shudder at even the thought of investing in the market!

The fear is well warranted considering the uncertainty we are facing.

I don’t know where this will end or how much more downside we can eye from here. Not because I am ignorant but only because it should not matter for me as a long-term investor in the equity markets. Notwithstanding all the macro and micro gloomy data points together with the uncertainty hovering around, the fact remains that the current turmoil gives an excellent opportunity for an Investor to build a long-term portfolio in equity markets.

Yes, I do agree a lot will depend on the quality of stocks we pick in the portfolio. But here again, remember that investing is simple. It is only as complicated as you make it. Considering the fact that we are almost trading at 2-year lows on the Index, this is an excellent opportunity for first-time investors to build fresh exposure in the equity market. It surely doesn’t get better than this.

So, where does one start??

The index has shaved off more than 50% from its peak dragging with it all the heavy weight stocks.

In times like these it is always advisable to start building exposure in the markets through the frontline stocks for the following reasons:

1. These are fundamentally good stocks, available at attractive valuations. Typically, during periods of panic, market players tend to over-do the concerns surrounding the stocks pushing the prices much below their intrinsic value.
2. Whenever there is a reversal of trend in the markets, these stocks will be the first to bounce from their lows giving a sharp recovery

How can you take exposure to these stocks?
There are various ways in which you can start building exposure to these front liners:

• Index Funds: Index funds (passively managed funds) from mutual funds could be a good option. These could be funds tracking a particular index (say Nifty or Sensex).

• Diversified Equity Funds: One can have exposure to diversified equity fund schemes of mutual funds, where the exposure could be towards the blend of mid & large-cap funds as per the schemes’ objectives. But please make sure you check the top 20 holdings of the scheme you are planning to invest in, as your objective is to be a part of the frontline stocks.

• Nifty BeES: Nifty BeES is the first ETF (Exchange Traded Fund) in India.

The investment objective of Nifty BeES is to provide investment returns that, closely correspond to the total returns of securities as represented by the S&P CNX Nifty. Typically value of Nifty BeES will be 1/10th value of the prevailing Nifty price (For example, if Nifty is currently trading at 3500, Nifty BeES could be available @ 350) and it can be bought and sold on the National Stock Exchange like a share. In short, you buy/sell the broad Indian market using just 1 scrip.

• Direct Equities: You can even directly buy the stocks form the market in a staggered manner, provided you fully understand the nitty-gritty of investing in equities. If you don’t possess the requisite expertise, simply turn to a professional money manager.

Whatever may be your mode of investing make sure you do some serious investing at these levels. If you feel jittery to invest the entire chunk, start investing at least 30-40% of your investible surplus in equities. And remember always, that best of the investments are always made in the worst of the times.

Kapil Mokashi is an Associate Financial Planner, working with Sharekhan Ltd. as an equity advisor.