The recent roller-coaster ride on Dalal Street has left many investors clutching their portfolios anxiously. With the Nifty 50 down nearly 12% from its September 2024 highs to touch lows near 23,250 in January 2025, the obvious question on investors’ minds is: Should I be worried about my mutual fund investments?
The short answer, according to market experts, is a resounding no. In fact, experts from the industry indicate that despite the market turbulence, mutual funds have demonstrated resilience.
December 2024 saw equity mutual funds attract inflows of Rs 41,155 crore, which marks a 14% increase from November.
Even more telling is the record-breaking Rs 26,459 crore flowing into Systematic Investment Plans (SIPs), suggesting that experienced investors see this volatility as an opportunity rather than a threat.
Following Monday’s stock market crash, Radhika Gupta, Managing Director and CEO of Edelweiss Mutual Fund, said, “Today has not been a very pretty day — it’s one of the roughest falls, with midcap indices down 4%.”
However, she explained that such market movements shouldn’t trigger panic reactions.
“With times like this, all the news you see, there is a natural temptation to panic and take action that may not be good for your portfolio,” she noted. “My advice to you would be to embrace the volatility and try to hold on for the long term.”
STAY INVESTED OR CASH IN?
For those tempted to halt their SIPs or switch to the perceived safety of fixed deposits, experts offer contrarian wisdom. Let SIPs continue because now you are buying units at cheaper levels, Gupta said. The strategy, known as cost averaging, often proves particularly effective during market downturns. “Generally, staggered investment is a good principle in these markets,” she added.
Trivesh, COO of Tradejini, also pointed out some silver linings in the current market landscape.
He noted that sectoral and thematic funds have attracted significant interest, pulling in Rs 15,331 crore in December alone. “Sectors like pharma and auto stood out, reinforcing the importance of aligning fund choices with sectoral strength,” he said.
DON’T PANIC
For investors still struggling with market anxiety, there’s a middle path. Instead of making dramatic moves to cash, Gupta recommended considering hybrid funds or balanced advantage funds, which offer a mix of equity and debt exposure.
According to her, the balanced approach can help investors maintain their long-term investment journey while managing short-term market stress. Therefore, the key message from market experts is clear: Market cycles are natural, and current volatility, while unsettling, is not unusual.
Rather than panicking, investors should view this period as an opportunity to accumulate units at lower prices.
As Gupta put it, “Ups and downs are part of the market cycle. But what is very important is not to panic, to control our reactions and to go through our journey with emotional resilience.”
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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