Investment Strategy Post-Election Results: Experts’ Advice for Mutual Fund Investors
The Indian equity markets witnessed a significant crash on June 4, with both the BSE Sensex and NSE Nifty plummeting more than 6 percent each. The sharp decline came as a surprise to investors following the election results, which showed a closer contest than anticipated.
The Bharatiya Janata Party-led National Democratic Alliance (NDA) was leading in 292 seats, while the INDIA bloc was ahead in 230 seats as of 1 pm. The unexpected results left mutual fund investors seeking guidance on their next moves.
Financial experts, however, are emphasizing that while election results can trigger short-term market fluctuations, long-term investment decisions should not be solely based on such events. They believe that the government’s policies and their implementation are more crucial for sustained growth in the market.
Harshad Chetanwala, co-founder of MyWealthGrowth.com, highlighted the importance of aligning one’s portfolio with their financial goals rather than reacting to election outcomes. Ankit Jain, Senior Fund Manager at Mirae Asset Investment Managers, echoed this sentiment, emphasizing the need for a diversified portfolio with a balanced risk-reward equation.
Jain advised investors to focus on their goals, risk profile, and investment duration when making investment decisions. He suggested allocating a significant portion of the portfolio to equities or equity-oriented mutual funds for long-term growth, while also considering debt funds and gold ETFs for capital preservation during market volatility.
Experts recommended sticking with systematic investment plans (SIPs) to benefit from rupee cost averaging and avoid market timing risks. They also highlighted key sectors such as agriculture, textiles, automobiles, IT, and financial services as potential areas for investment due to their growth prospects.
In terms of investment strategies, experts suggested looking for reasonable valuation pockets, with a focus on large-cap stocks over mid-cap and small-cap segments. They also recommended considering growth strategy funds and dynamic asset allocation/balanced advantage funds for potential opportunities.
Overall, the consensus among financial experts is to maintain a long-term perspective, diversify portfolios, and focus on fundamental factors rather than short-term market fluctuations influenced by election results. Investors are advised to stay calm, avoid knee-jerk reactions, and make informed decisions based on their financial objectives.
