Should you hike your mutual fund SIPs given the recent market downturn? 3 experts answer

The recent market downturn has created a difficult situation for mutual fund investors when it comes to systematic investment plans (SIPs). Deciding whether to increase, maintain or reduce his SIP allocation during market declines can be complex. As the market continues to decline, many investors are seeking advice from experts on whether to increase their SIP allocation or take a wait-and-see approach.

The recent significant decline in India’s benchmark indices is likely the result of a combination of factors. Let’s examine these three contributing factors.

• December quarter performance is unsatisfactory: Many well-known companies announced disappointing financial results in the final quarter of this year, failing to meet analysts’ expectations. This lack of favorable growth momentum negatively impacted investor confidence and led to selling pressure across the market.
• Calm world situation: The influence of subdued signals from global markets cannot be ignored. Geopolitical tensions, economic slowdown in major economies and concerns about rising global interest rates contributed to the pessimistic sentiment in India.
• Impact of rising US government bond yields:The recent rise in US Treasury yields to a five-week high has put further pressure on domestic stocks. Rising U.S. yields have made dollar-denominated assets more attractive, prompting capital to exit emerging markets such as India. This outflow of foreign investment is increasing downward pressure on Indian stock prices.

Apart from these factors, other factors that may contribute to market downturn may include:

• Institutional investors who take profits: Some investors may be looking to take profits after the strong performance in recent months, which could result in short-term selling pressure.
• Sector-specific concerns: Adversity within specific sectors, such as IT or pharmaceuticals, can impact stock prices in those sectors and push down the overall market.

Mid-cap and small-cap stocks are losing momentum. Increasing market volatility has gradually led investors towards the large-cap sector, which is known to be relatively stable and less susceptible to sudden fluctuations. The anxiety amid frequent market turmoil is palpable. Undoubtedly, the ongoing market decline could present an opportunity for long-term investors to acquire blue-chip stocks at potentially attractive prices. Nevertheless, it is important to approach this scenario with a strategic and careful mindset.

As the turmoil continues, many investors are considering whether to take advantage of the market downturn and increase their mutual fund SIPs.

Mr. Bilal Bhatt, Founder; money mantra “Whether you should increase your mutual fund SIPs during the recent market downturn depends on several factors and there is no one-size-fits-all answer. Yes, a market downturn provides an opportunity to purchase more units at a lower price. This balances the overall cost per unit and potentially increases revenue when the market recovers. The benefits of compound interest cannot be ignored either, as investing more during downturns can accumulate more units and compound interest can significantly increase your corpus in the long run.”

Bhatt also added, “Maintaining or increasing your SIP during volatile times strengthens regular investment habits that are essential for long-term wealth creation,” adding, It hints at why you can benefit from increasing your SIP gradually.

But there is Suresh Sadagopan, the founder. Ladder7 Wealth Planner He advises investors to take a more cautious approach. Sadagopan further added, “You cannot reduce or add to your investments, especially SIPs, based on market volatility. If you have excess cash, you can deploy funds when the market is down. . Otherwise, you should continue with your SIP regardless of market fluctuations.”

Gaurav Rastogi, Founder and CEO, Kuvera.in “Just as SIPs emphasize investment discipline rather than market timing, so too do SIP amounts grow at least at the rate of inflation each year.”

Sarony Sanghvi, Founder; my wealth guide “Each year, the market corrects by 10-15%. It is very difficult to accurately measure the timing and amount of the fall. Over a period of 10 years, the Indian stock market has been on an uptrend. Monthly Reality I think you should consider how much you can save and SIP the entire amount based on your asset allocation.”

While strengthening your SIP and expanding your investments can be a sound strategy to accumulate more units, investors should be cautious and avoid being too hasty with when, where, and how they allocate their funds. You should refrain from making decisions. Market bottoms are notoriously difficult to predict, and while the current correction may seem like a good entry point, further price declines remain possible. It is important to avoid impulsiveness and not invest large sums of money hastily.

Additionally, consider taking a phased approach instead of consolidating all your investments into one. Start small and let your costs average out over time as the market fluctuates. Most importantly, if you’re unsure about weathering market downturns or choosing the right stocks or mutual funds, consider seeking the advice of a financial advisor. Our expert advisors will provide you with personalized recommendations tailored to your risk profile and investment objectives.

Investing during market downturns can certainly be a wise strategy for long-term wealth creation. However, it is essential to tread carefully, choose stocks carefully, and keep a long-term perspective.