Holiday Investing: Safeguarding Your Portfolio in 2024

There is an adage: “Money never sleeps.” While it might be true, that does not mean that share markets never take a day off. Indeed, you can expect at least 10-12 stock market holidays every year. Amidst the high-energy hustle, even the Indian stock market – Dalal Street – sometimes needs to catch its breath.

For traders/investors, these closures dotting the calendar mean you must be extra-cautious with the timing of your trades.

To start with, let’s pinpoint the dates on which the Indian bourses will remain closed in 2024.

Indian Share Market Holidays 2024

The Indian stock market – National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) – will observe 19 holidays in 2024.

Why Does The Share Market Holiday List 2024 Matter?

Getting caught off guard by a share market holiday in 2024 is the last thing you want. These closures can be unexpected disasters for investors, especially future & options (F&O) traders.

For instance, let’s say you open a new position on Tuesday, October 1st, 2024. You only want to keep this position open for a month and will close it exactly next month.

However, you do not realize that Friday, November 1st is Diwali, and the bourses remain closed. Now, you cannot exit your position. Over the weekend, new information surfaces that negatively impact the stocks in your portfolio. When the market finally opens on Monday, your position reduces by 10%.

This is one example of how ignoring the share market holidays in 2024  can leave you high and dry. This risk particularly magnifies for investors who trade derivatives, options, and futures.

The Holiday Effect

Stock markets across continents witness tremendous surges on the penultimate trading day before a scheduled holiday. This pre-holiday market deviation is called the “holiday effect.”

This phenomenon is linked to investors’ and consumers’ optimism and confidence, and happens owing to various reasons.

Some trade pundits chalk it down to trading volume. Most investors (professional and retail) go on vacation to relax from their regular trading and research routines. As such, the trading volume generally drops.

But this does not mean that no trade is going on. Some investors view the season as an opportunity to go the extra mile and gain some tactical advantages in the market. The moves made by these few traders sticking around trigger more significant market fluctuations.

This elevated stock volatility enables such traders to earn quick gains during the share market holidays.

Secondly, some investors become more careful before holidays and use the time right before closure to sell high-risk stocks. That way, they can avoid any unexpected bad news or events that could come up while they are on a break.

Finally, people spend more money around the holidays, resulting in the share market hitting record highs. Consequently, the share prices of retailers, in particular, increase.

Also Read: Timings of the Stock Market

How To Tackle These Off-days?

If the upcoming share market holidays 2024 are making you reconsider your current portfolio, try the following:

Avoid Timing the Market

Speculating how your holdings will perform while you are on vacation can open the floodgates to huge losses. Making investment decisions based on seasonal changes is risky as market performances vary considerably over multiple years.

Combining that with thinner than usual market liquidity, the risk of “timing the market,”, especially during the period from Dussehra to Diwali, intensifies. Hence, do not make any impulsive changes to your stock portfolio that do not complement your long-term investing goals.

Focus on Long-term Wealth Creation

You are always subject to some level of risk when your money is tied up in the share market. That said, negotiating short-term inconveniences can translate to significant gains going forward. The best move is to stick to long-term investments and cut through any market fluctuation during the time frame.

Guarding Your Gains

If you decide to engage in any trading during the share market holidays in 2024, do so with extra caution. Do not let potential short-term losses spoil your holiday mood or compel you to make any illogical moves in a bid to mitigate the inherent risk of investing.

Rather than scouting for trading opportunities to lock in short-term profits, use the Indian share market holidays 2024 to rebalance your stock portfolio before the year ends. No need to show a knee-jerk reaction to market volatilities that may or may not occur.

While you can find numerous profit possibilities over the holidays, stock trading is challenging. If the level of volatility troubles you, you better stay away from the game. Always remember that you will find more investing opportunities down the lane.

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