Equity markets have historically demonstrated resilience by coming out stronger after a correction and giving enormous long-term returns.
Benchmark indices Sensex and Nifty closed lower on the last trading day of the 2024-25 fiscal year on Friday, mirroring weak trends in global markets amid uncertainties over Trump’s tariffs.
In the 2024-25 financial year, the Sensex jumped 3,763.57 points or 5.10 per cent, and the Nifty climbed 1,192.45 points or 5.34 per cent. While markets have remained quite volatile for the last couple of months, experts believe that markets are entering the new fiscal year with better fundamentals and an improving domestic outlook as valuations are now close to historic levels for large caps, while RBI is expected to deliver further rate cuts in the coming months.
What should mutual fund investors do in the volatility?
In times of market downturns, investors are usually in a predicament, caught between the fear of loss and the hope of future gains. This is, in fact, the time when equity mutual funds can stand out as a good investment vehicle.
Equity markets have historically demonstrated resilience by coming out stronger after a correction and giving enormous long-term returns.
According to Rajesh Katoch, CEO, EZ Capital, through equity mutual fund investments, one gets the advantage of professional management and diversification, which reduces the risks of single stock investments
“In addition, the prevailing market conditions offer a chance to buy quality assets at discounted values. Investors must look for funds that have exhibited stable performance, especially those that have navigated past market turmoil well. Such a strategy not only enables one to appreciate capital but also enables investors to ride on the inevitable recovery of the market,” Katoch said.
Katoch insisted that it’s crucial to take a long-term view and not act in haste with decisions based on short-term market trends.
“By investing in equity mutual funds systematically during these bear phases, investors can leverage the rupee cost averaging power, which can result in substantial wealth creation over the long term,” he said.
Thus, instead of avoiding the market, it’s time to think of equity mutual funds as a strategic part of a diversified investment portfolio.”