The broader market has seen a steep correction in the past few months. The Nifty Midcap 100 and Nifty Smallcap 100 are down 10.5 per cent and 12.2 per cent, respectively. While a few experts have expressed caution, others have urged investors to continue with existing investments. Businessline takes a look at some of the advice that has been doing the rounds.
Insights from experts
S Naren, CIO, ICICI Prudential MF: “I do not believe that this is the time to invest in small and mid-cap SIPs (systematic investment plans). But I am unable to convince my sales colleagues. I tried my best but failed miserably. But I believe that this is the time to stop SIPs in small and mid-caps because they are so overvalued,” the veteran fund manager is reported to have said at a recent distributor meet. “We think it is a clear time to take out lock, stock, and barrel from small- and mid-caps. The entire risk is now borne by you (the distributor) and the investor.”
Edelweiss AMC: “When 1-year SIP returns were negative, continuing the SIP and remaining invested for a longer duration would have not only recovered the losses but also generated positive returns. Investing when market is relatively expensive or trading at a higher PE, staying invested and continuing SIPs for the long term, has delivered strong SIP returns over 3, 5, or 10 years. Continuing SIPs during market corrections leverages the rupee cost averaging benefit, potentially improving long-term returns.”
Vicky Mehta, independent analyst: “Any equity investment has to be for the long term; at least 7-8 years. That goes without saying. SIPs are a great way to invest but it’s just a mode of investing. SIP is not a magic bullet. You cannot be blind to the investment credentials of the underlying stocks or funds you are investing in. The SIP route will not alter the fundamentals of the underlying investment. For instance, if you invest in a sector fund it is only going to do well so long as the underlying sector does well.”
Pawan Bharaddia, Co-founder, Equitree Capital: “The broader market pain is deeper— 60 per cent of companies above ₹1,000 crore market cap are down over 30 per cent. Historically, small-cap corrections play out over 8-12 weeks before stabilizing. We believe we are now entering the final phase of this correction, with valuations looking increasingly attractive. Such corrections have proven to be strong entry points for long-term wealth creation.”
Sunil Singhania, founder of Abakkus Asset Manager: “After huge swings and volatility, we believe that equity markets are stabilizing. The current correction has brought some semblance to valuations. Corporate earnings for the December quarter have been better than the previous quarter and it is expected that the March quarter will start to see double digit corporate earnings growth. Hopefully, the Trump-led news flow will stabilize. Swings will continue but much narrower than seen of late. Portfolio damage has been seen in January, but the fundamental focus makes us believe that the bounce back will also be equally sharp.”