There has been a substantial upswing in the Indian markets over recent months. The BSE Sensex reached an unprecedented peak of 63,588.31 points during early trading on Wednesday, June 21 and surged to a fresh high of 63,601.71 points again during morning deals on June 22. The mid and small-cap space has been buzzing particularly.
However, on Friday, the markets turned red with the Sensex down 147 points and the Nifty down 61 points around 2 pm.
The recent surge can be attributed to robust demand from various investor categories who recognize India's resilient economic growth compared to other emerging markets.
As the market approaches an all-time high, mutual fund investors find themselves at an important juncture. Market highs can evoke mixed emotions, with investors experiencing both excitement and apprehension. While the potential for growth and profitability is enticing, it is crucial for mutual fund investors to make informed decisions and adopt a prudent approach.
We sought opinions of industry experts on how mutual fund investors should navigate this market.
Amar Ranu, Sr. VP and Head - Investment Products and Insights, Anand Rathi Shares and Stock Brokers
The market level is an outcome that depends on many factors. As an investor, one should stick to asset allocation based on the given risk profile and the underlying holdings. Maintaining discipline in investments regardless of market levels is essential.
This should include 80-85% of the total portfolio, known as strategic allocation, while the remaining 15-20% can be allocated to tactical allocation. This allocation can be utilized for compelling market opportunities, such as significant market declines or sectoral allocations if applicable.
Despite nearing the previous market peak, India is best positioned for medium to long-term growth. Investors should continue to invest according to their risk profiles. The conditions are favorable for the equity market to perform well, outperforming other markets. It's important to note that volatility is a constant factor in equity investments. However, over a longer period, volatility tends to settle down.
Sonam Srivastava, Founder & CEO, Wright Research
As the market nears an all-time high, mutual fund investors should firstly, refrain from panic. Market highs are not necessarily a signal to sell. Keep in mind that investing is a long-term game, and fluctuations are part of the process.
Secondly, review your portfolio. Are your investments still aligned with your financial goals and risk tolerance? If not, some adjustments may be necessary.
Thirdly, don't try to time the market. It's nearly impossible to consistently predict market highs and lows accurately. Instead, a systematic investment plan (SIP) in mutual funds helps average out the cost of investments over time.
Lastly, consider rebalancing your portfolio. If the high market has tilted your asset allocation, it may be time to rebalance. This could mean selling some equity funds (if they've grown significantly) and moving the proceeds to other asset classes. Always consult with a financial advisor before making significant changes.
Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company
The markets crossed an all-time high on International Yoga Day. Maybe there is a happy coincidence. In yoga, the focus is on the inside world rather than the outside. In the market, investors should also focus on their goals rather than the index level.
In yoga, the benefits compound over a period of time. In the market, long-term compounding is immensely beneficial. I recommend investors to maintain disciplined asset allocation and a long-term investment horizon. Remember, 'sitaro se aagey Jahan aur bhi hai!'"