2023 in Review: 17 important lessons investors should learn from this year (2024)

The commencement of the year was marked by elevated inflation, geopolitical uncertainties, and Foreign Portfolio Investor (FPI) outflows, creating a cautious market sentiment.

However, as the year unfolded, these initial pressures gradually subsided, giving way to an improvement in investor confidence. The market exhibited adaptability and robustness, weathering the storm of uncertainties.

The positive performance of the Nifty, even in the face of global economic dynamics and external pressures, showcased the underlying strength of the Indian financial landscape. This resilience served as a testament to the effectiveness of economic policies, regulatory measures, and the adaptability of market participants in navigating challenges and fostering stability.

Read here: Will the Indian market continue its strong run? Here's where experts see Nifty by 2024-end

While challenges such as fluctuating global interest rates, volatile crude oil prices, and impending domestic elections persist, the Indian growth story continues to be compelling, offering investors significant potential for wealth creation over the long term.

Here's a look at some lessons investors should learn from 2023.

Anshul Arzare, MD and CEO, Yes Securities

1. Financial literacy: Anshul Arzare, MD and CEO, Yes Securities, believes that staying updated, mitigating risks, being persistent, planning, and budgeting, are essential ingredients for financial success.

2. Caution against unforeseen occurrences: Arzare also advised that it's prudent to anticipate unforeseen occurrences, such as the existing geopolitical tensions and the recovery challenges faced by developing nations post Covid.

Read here: 2024 Market Strategy: What investors should stay away from next year? Experts answer

3. Focus on quality: Arzare also warned that individual investors should exercise caution and avoid depending solely on the momentum observed in the grey market when considering investments in IPOs. Instead, the focus should be on quality companies with strong moats and reasonable valuations to ensure sustainable returns. Lastly, do not try to time the markets - it’s a recipe for disaster. Market fluctuations are an inherent feature, so avoid impulsive responses and instead adopt disciplined, research-driven investment practices with proper asset allocation to navigate volatility and cash flows.

4. Focus on the long term: Arzare stated that is important to understand that wealth creation is a slow process and needs disciplined and patient investing. Therefore, to reap benefits, investors should have a long-term perspective when investing toward their financial goal.

Neeraj Chadawar, Head - Fundamental and Quantitative Research, Axis Securities

5. Invest systematically: No one can predict the timing of the market correction or the period of the bull phase. These bull and bear phases of the markets are driven by sentiment in the market. When sentiment s positive, the market will continue to do well while the market will fall in a fear scenario. Hence, investing systematically in a market rather than investing in one tranche is recommended, said Neeraj Chadawar of Axis Securities.

Read here: Markets in 2024: Key things investors need to keep in mind before investing

6. Importance of asset allocation: Asset allocation is an important step while managing personal finance. Volatility is an underlying risk associated with the individual asset class. 2023 saw a highly volatile time, with many ups and downs in asset prices amid uncertainty that grew due to Hawkish FED, rising bond yields and rising geopolitical tension. One can sail through these volatile times smoothly with the right savings diversification into various asset classes with proper risk calibration. With the right asset allocation, one can manage the portfolio drawdown in the case of uncertain times.

7. Clean the portfolio on a regular basis: Every bull phase of the market will provide the opportunity to correct the mistakes of the last bear phase. In a bull market, prices go up over a period, led by optimism over the economic recovery. In this phase, the fear of loss is very low, which leads to a momentum in low-quality stocks. In bull phases, investors are often tempted to create higher holdings in low-quality stocks and end up with higher exposure to them. Once the cycle turns, they make huge losses due to the less weightage given to the quality of the portfolio. So, making a high-quality portfolio with profit booking or a well-defined exit strategy in low-quality stocks is recommended once targeted returns are achieved.

Read here: Axis Securities lists 9 stock picks for 2024 with up to 33% potential upside

Kavitha Subramanian, Co-Founder, Upstox

8. Conviction in equities as an asset class: According to the BSE website, the Indian key benchmark index, BSE Sensex, is up by more than 16% on a YTD basis. These double-digit returns (which are ex-dividend) are in spite of the geopolitical tensions and the headwinds posed due to high inflation and rising interest rates. Further, the total returns from NIFTY50 for the last decade have been in the range of 13-14%

9. PSU banks are not always a bad choice: The Nifty PSU Bank index was up by 23% on a YTD basis, while the Nifty Private Bank index was up by 9% during the same period. Valuation matters and PSU banks as a basket were available at cheaper multiples at the beginning of the year. Always look at valuations & multiples (value) before investing.

10. Indian market is no longer dependent upon FIIs: The year 2023 belonged to the retail investors in India and their dominance. The FIIs participation is at a 10-year low, and the Indian benchmark indices is at an all-time high even as the retail participation in the Indian equity market is on the rise.

Read here: Top 10 trends that caught investors' attention this year

11. Index investing to gain momentum: It is possible that we see an uptick in index investing in 2024. The momentum in index investing via Index Funds and ETFs is growing in India. We think Nifty ETF, CPSE ETF, Gold ETF, etc might see even higher inflows in 2024 compared to 2023. The market is a reflection of India’s overall growth and Index Funds derive their growth directly from the overall market movement - making these a good prospect for new users.

12. SIP is the new mantra to beat market volatility: The strong SIP book in 2023 has shown how retail investors in India are navigating market volatility. SIP investments are the best way to beat market volatility and Indian investors have understood the importance of the same.

13. Don't sell in panic or after bad news: Once again in 2023, we saw that the markets dipped on geopolitical tensions and on the fears of recession after the US Fed announcements on inflation worries. Those who lacked conviction and confidence sold their equity portfolio fearing a worsening geopolitical situation and its negative impact on oil and inflation. However, smart investors bought into the dips in 2023 and were able to make above-average gains. BSE Sensex is up by 21% since the March lows in 2023. As the adage goes, “time in the market is better than timing the market.

Read here: See Nifty at 25,000 level by 2024-end, says Rishi Kohli of InCred

Trivesh D, COO, Tradejini

14. Avoid being reactive: The market, if you look at the past year, has not been a good teacher. The stock market is currently at an all-time high. Anyone who targets the dart is gaining profits, which is not a good sign. A lot of investors made investment decisions based on the trajectory that the markets took.

15. Investing is a marathon, not a race: As we witnessed, long-term investors got good returns for their equities this year. Those who held onto their stocks for the long term consistently outperformed, and those who jumped ship when the market trembled lost the race. I learned that the most challenging aspect of investing can be staying invested.

16. Don’t go against larger macro-economic trends of the market: Macroeconomic factors may or may not be related to a particular country, but they nevertheless impact its stock markets due to the extreme globalisation of economies. Therefore, while making projections of the stock markets and any investment decisions, it is important to consider the macroeconomic factors and their impact on the held investments.

Read here: What made this year unique for equity market? 3 experts answer

17. Look for good stocks at discount rates or growing stocks at fair prices: The market holds treasures for both discount hunters and growth seekers. For those with an eagle eye, look for stocks currently trading at discount rates or focus on companies experiencing promising growth, but avoid overvalued hype with fair pricing and sustainable momentum.

Finally, the necessity of unlearning and adapting to changing market dynamics is articulated. Investors are urged to challenge assumptions continuously, emphasising that a calculated risk approach is crucial. Opportunities will come and go, but preserving capital is a constant priority in the ever-evolving financial landscape.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 29 Dec 2023, 02:36 PM IST