In the series of highs and lows in the markets, some small investors have burnt their fingers. What should be done to help one against this extreme volatility? Does one need a plan or strategize or should one just wait and watch?

P Phani Shekhar, Fund Manager, Angel Broking said small investors should invest in stocks that are evergreen. For example- there are stocks like Reliance Industries and ICICI Bank. They should keep things simple and invest in a staggered manner.

N Sethuram Iyer, CIO, Shinsti Investments said it is very difficult to interpret the markets and understand the valuation of individual stocks. He advised that it should be left to the experts and hence, mutual funds would be a good way to invest.

Gaurav Mashruwala, Certified Financial Planner said it is less risky to invest in equity than it was at 21,000 levels. He advised people to stay put if they have invested for goals, which are more than 7-9 years away. He added that as long as they are focused on their financial goals, there is no need to change.

Excerpts from CNBC-TV18’s exclusive interview with P Phani Shekhar, N Sethuram Iyer and Gaurav Mashruwala:

Q: Is there a need to really strategize or find a way to deal with volatility? Is it nearly necessary?

Shekhar: It is necessary. But if you think you can beat volatility in equities, it is not the right approach to adopt. All that one should understand is what kind of market are we in and how things have changed. One needs to appreciate that from 21,000 to 15,000, the whole canvas has changed. So, the approach you had at 21,000 and the sectors and stocks that you are looking at are not necessarily the same thing at 14,000. A lot of assumptions that one built in at 21,000 have changed. A lot of supporting conditions that helped the markets, those companies and sectors might not be there at 14,000.

So, as far as beating volatility is concerned, one may not be 100% successful. But one needs to revisit ones assumptions while investing at 14,000 levels.

Q: What should a small investor look at while picking a stock?

Shekhar: It is a challenging task and one needs to understand that things have changed in a relatively short span of two months. Assuming that small investors are not proficient at investing in markets, they should keep things simple. They should invest in stocks that are evergreen. For example- there are stocks like Reliance Industries and ICICI Bank. Keep things simple and invest in a staggered manner.

Q: Last month’s assets under management (AUM) figures reflected high mutual fund inflows. Due to the downturn probably the inflows wouldn’t match or there would be certain hindrance as far as inflows were concerned. At the same time, some of the equity mutual funds have seen 20-25% drop in net asset value (NAV). Is this a buying opportunity that an investor is looking at this point in time?

Iyer: One must understand the circumstances of the market. Markets have gone through a fairly steep period of correction. This is not the time when investors would come rushing in to invest. Secondly, there is uncertainty about the markets.

We don’t know whether markets are going to go down further or whether they would stablise and then reverse and go back into their secular bull run, which we have had for fairly long time. It’s been on virtually for five years now.

So, one needs to understand the sentiment before an investor can decide what to do. Right now, the situation is where most investors don’t know how the market is going to behave in the immediate future.

A small investor needs to understand that today its very difficult to interpret the markets and understand the valuation of individual stocks. In such conditions, I have only one advice. If you don’t understand the markets leave it to the experts. In today’s context, the Mutual Fund people are the experts in the business. So, mutual funds would be a good way to invest.

In these conditions, one doesn’t know whether the markets have bottomed out. So, there could be further pain in the market and further losses to be incurred. An investor should not pull all the money at one go. One must be very disciplined in terms of investments. Spread your investments in terms of assets classes and time span and don’t put all the investments at one go. These are the basic cautionary things, which every investor has to follow meticulously. This is the time when every investor has to be disciplined in terms of his approach to investments.

Q: Are you getting more calls from your clients to re-look at their portfolio? Are you telling them wait and do not panic?

Mashruwala: Being planners, we don’t get so many calls because equities is always being recommended for goals which are 7-9 years away. We proactively call our clients and reinstate what we always stated. So, there is no panic as such.

Q: What should an investor look at? Should they look at their portfolio and find out if there is anything they need to change or should they just wait and watch?

Mashruwala: There are a couple of things. It is less risky to invest in equity now than it was at 21,000 levels. So, if at 21,000 levels one did not feel scared, then I don’t know why one should feel scared at 15,000 because risk return is more in favour than what it was.

Normally, we make investments to get a good night’s sleep. If these investments are giving one sleepless nights, then probably equity is not an asset class for you.

Stay put if you have invested for your goals, which are more than 7-9 years away. I don’t think there is any need to do anything because of a few bad months. As long as you are focused for your financial goals, I don’t think you need to change.

For more strategies,watch video...