Nifty up by 10% from April low. What should mutual fund investors do?

Economic Times

06-05-2025

ETMarkets.com Despite Nifty 50's recent gains, experts advise caution on lumpsum investments due to expected volatility from foreign and geopolitical factors, recommending SIPs for long-term investors.
With the benchmark index - Nifty 50 up by nearly 10% from April's low level and reaching a level of 24,461 on Monday, the market experts recommend that the volatility this year is expected to continue, especially on the back of foreign and geopolitical developments and therefore there is a greater need for caution on lumpsum equity investments whereas SIPs continue to be the best option for the long-term investor as discipline and rupee-cost averaging is ensured through them.'Those with funds for a lumpsum investment can consider putting in staggered allocations through STPs into equities. It is wise to make any investment decision in accordance with the goals, risk appetite, and timeline of the individual. For those who missed the recent rally, the time is ripe for entry, albeit first gradually and strategically, and without trying to time the market,' recommended Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance.
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The index was at the level of 22,161.6 on April 7, the lowest one in the current financial year so far. In the last three months, the index has gone up by 2.55% whereas in the six months it has gained 1.46%. Nifty50 gained 8.32% in the last one year and went down by one and a half percent.Nifty50 touched its 52-week high level on September 27, 2024 of 26,277 and is currently down by nearly 7% from its 52-week high level.
As the benchmark continues to gain momentum post April's low, the expert believes that the recent rally, while powerful in its own right, is so far unable to breach all-time highs set last September and investors must not consider decisions based on short-term movements and, instead, base their investments on long-term financial goals.Minocha further recommends that long-term-oriented investors must continue to stay put, as timing the entry and exit is never fruitful in most cases, probably less so now, given the uncertainties on the geopolitical front, which may bring about bouts of volatility. 'Money required for the near term should not be exposed to equities but instead could be invested in debt or hybrid funds. This rally may give way to consolidation, but there should not be any profit-booking by goal-based investors,' he added.ETMutualFunds looked at the performance of equity mutual fund categories since the April low and found that three categories gained in double-digits in the mentioned period.
Since April 7, the Auto sector based funds offered 11.17% average return, international funds gave 10.52% and tech funds have given 10.44% average return in the same period. Mid cap funds offered an average return of 8.94% in the same period, followed by large & mid cap funds which gave an average return of 8.89% in the said time period. Pharma based funds gave the lowest return of 6.92% in the similar time period.Based on the above-mentioned data, the expert mentioned that the rally so far has largely been concentrated, specifically led by autos, international funds, and tech sectors as they enjoyed strong earnings visibility and had global tailwinds in their favor. In contrast, pharma has, in effect, not participated in this rally even with the upside of the U.S. having made sure that pharma was exempted from tariff hikes, he added.
Also Read | Global mutual funds recover post Tariff lows. How long will momentum sustain? 'A broad-based structural uptrend is yet to emerge. However, investors should continue to invest in flexi cap types of funds and let the fund managers do the stock picking of the sectors they are comfortable with. The selection of a good fund manager based on research and their investment philosophy will be very important,' said Minocha.Recently the global markets recovered after witnessing a down post Trump tariff. As on April 28, 2025, the global indices gained upto 9%.Since April's low, the global benchmarks such as Nikkei 225, DAX, Nasdaq, and Hang Seng gained 18.28%, 16.66%, 15.21%, and 13.49% respectively. S&P 500 and NYSE surged 12.33% and 11.61% respectively in the same period, followed by Dow Jones which has gained 8.82%.
The expert said that since April's low, the Nifty had a sharp rally of 10%, mostly owing to resilient Indian fundamentals being supported by global cues and the strong corporate earnings, decent GST collections, and optimism around political stability have powered investor sentiment. The domestic investors remained steady; however, a major trigger was the return of foreign institutional investors (FIIs), he added. Commenting on whether the current rally is driven more by domestic fundamentals or global cues, Minocha said that, 'On the domestic front, easing inflation fears and hopes of a Fed cut have pumped up risk aversion. Besides these factors, India is increasingly poised to become a long-term beneficiary of shifting global trade flows, especially alongside the U.S. tariff-related uncertainties, that is, at the cost of China, Mexico, and Canada. The long-term India growth story is intact and the confidence is being seen with the recent global developments.'One should always consider risk appetite, investment horizon, and goals before making investment decisions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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