Sensex at all-time high; what should mutual fund investors do?


The stock market is once again scaling new highs. The S&P BSE Sensex hit an all-time high – closing above 62,000 for the first time – and the Nifty crossed 18,500 intraday as the US Federal Reserve meeting minutes showed the rate-setting panel was more receptive to a slower pace of future rate hikes, giving a boost to bullish sentiment, The Economic Times reported. “A “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes, according to the minutes of the November 1-2 meeting,” the report said.

Whenever the stock market crosses a psychologically-significant mark, many investors, especially mutual fund investors, inevitably ask: Should we do something different? Sell or buy something? Something extra that will help them to stay safe. The adventurous spirits would like to know whether there is an opportunity to make extra returns.

“Amongst the top 5 economies in the world, India is the only one likely to grow at a healthy 6%+ growth rate over the next one year. This majorly explains the strength of the equity market here vs. the other large economies. This coupled with better tax compliance as seen through GST collections, sagging crude and commodity prices, banking sector which is in the pink of health and likely double-digit earnings growth of the benchmark index over the next two years should help Indian markets continue to deliver superior returns,” says Sameer Kaul,MD and CEO TrustPlutus Wealth.

The trouble is if you talk to any seasoned mutual fund managers or advisors, they will tell you that you should not do anything- provided you are investing as per your investment plan. That doesn’t help, right?
Most investment managers say that investors should always focus on why they are investing and where they are investing. If they got this part right, they don’t have to worry about the market levels, says a fund manager. He says the market may go or down every day and that is just information for investors, especially long-term mutual fund investors. “Everyday market movements matter for day traders, not mutual fund investors.”

That sounds very pedantic? Well, the first thing you can do is do a quick check on your investments. See whether all your investments are going on as per your plan. We will throw some terms like investment plan or asset allocation plan here. If you have one such strategy, just see whether you are proceeding as per your plan and haven’t deviated from it

Why is it important? Well, most of us become adventurous or cautious sometimes- it could be because of the market conditions or some fancy idea. However, such tinkering will end up becoming a major issue when the market gets into trying phases. That is why it is extremely important to ensure that you are proceeding as per your plan. In other words, you make sure you know where you are investing and why you are investing.

Another important step is to make sure that you are proceeding cautiously. You don’t have to sell your mid or small cap schemes- this is just to make sure that you know we are getting into tricky territory. It is common for markets to become nervous after a new peak and some volatility may also follow. Just be mentally prepared.

For new and inexperienced investors, it is extremely important to continue with their investments. Don’t let the volatility or nervousness get in the way of investing regularly. Always remember that we can’t predict the market (at least not correctly all the time) and make the investments accordingly. That is why we invest regularly over a period of time so that these new highs and lows will not have a significant impact on your plans.

“Across all stock markets, India continues to be the bright spot. The confidence of investors is high as Sensex is surging day by day and touching new highs. The key is to set the expectations right in the present market conditions and remain disciplined. The uncertainty around the world is very much there and hence going gradual with the investment will be a better way to invest. One can look at investing 40% to 50% in one go at present and invest the remaining amount over 2 to 3 months looking at future opportunities,” says Harshad Chetanwala, Founder, My Wealth Growth, a wealth management firm, based in Mumbai.

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