scorecardresearchBull run continues! With markets hitting all-time highs, is this the right

Bull run continues! With markets hitting all-time highs, is this the right time to invest in index mutual funds?

Updated: 04 Jul 2023, 04:31 PM IST

Wealth advisors say that retail investors are advised to invest when they have 3-years-time horizon in the equity market.

It is recommended to stick to a goal-based strategy instead of trying to time the market, suggest investment advisors

It is recommended to stick to a goal-based strategy instead of trying to time the market, suggest investment advisors

Benchmark indices continued to extend their gains on Tuesday by scaling fresh all-time high levels. The S&P BSE Sensex surged to an all-time high of 65,587, while the broader NSE Nifty hit its lifetime peak of 19,414.

With market benchmarks scaling new lifetime highs, is this the right buying opportunity while the rules for the new normal are being re-written every other day.

So, does this mean investors should invest in the index funds to make the most of the ongoing rally?

We spoke to a few experts to dig deeper into this. This is what they suggested:

Long-term horizon

Sridharan Sundaram, founder of Wallet Wealth, says the market is primarily rising because there is an increase in the inflow from Foreign Institutional Investors (FIIs). We may not know if this surge would continue for short-term or long-term.

However, one should decide to invest at this juncture only if one has a three-year-time horizon in the equity market.

He adds further, “The rally may or may not sustain, but overall the Indian economy is in good shape. There could be short term corrections going forward. Therefore, one should invest in a staggered manner instead of lumpsum.”

And what if the market continues to rise, would not the lumpsum investment be more rewarding in that scenario?

On this, he argues by saying that there are two possibilities. "The market may go up and in that case — the first few tranches will provide the averaging. And the second scenario is that the market goes down, in that case, the averaging will happen on a downward trend.”

When asked if monthly SIPs (systematic investment plans) would be better, Sridharan suggests that one should opt for weekly SIPs and stagger investment over the next six months.

Goal-based strategy

Preeti Zende, a Sebi-registered investment advisor and Founder of Apna Dhan Financial Services, opines that investors should not get carried away with the ongoing bull run, and should stick to the goal-based investment strategy.

“When investors invest based on Goal Based Investment strategy, they do not get confused about the market level. As per this theory for long-term financial goals, you should keep on investing and keep invested irrespective of the market level,” she adds.

“But if you were investing for a long time and now the goal is just 2-3 years away then you can start booking profits from accumulated equity amounts and keep it safe in debt mutual funds. But for long-term goals such as retirement and kids' education and marriage, invest regularly in equity mutual funds as per the required asset allocation for the particular financial goal,” she adds.

Interplay of risk appetite and time horizon

Nitin Rao, Head Products and Proposition, Epsilon Money Mart says that the investors must feel happy for having weathered an 18-month-long storm and winning against all odds. It is a success story for the retail SIPs. But at the same time, the street expects the party to have only begun.

“Both global and domestic markets are coming out of the long period of sideways market and hence the undertone remains bullish. Coming to the question, is it the right time to plunge to index funds, it depends; whether an investor should invest and where should totally be based on their risk appetite and time horizon. We must understand that Mr. Market is a moody creature, and our own investments shouldn’t be based on that, rather it should be based on our financial goals,” says Rao.

“Speaking purely technically, daily RSI is entering the overbought zone and hence some time correction can happen, so basically a swing of a few hundred points can occur in the index. For investors with a horizon of at least 3 years, a disciplined way of investing can be continued without looking at the market levels regularly,” he explains.


Index funds are mutual funds that replicate the portfolio of an entire index like Nifty50. 
First Published: 04 Jul 2023, 04:31 PM IST