Sometimes, you do not need to do anything to make money in market

What would you do if you are unable to fathom what is going on in the stock market with so many macroeconomic distress at play?

Do nothing and stay put in the systematic investment plan (SIP) of mutual funds that you may be having. If you do not have it, go for one, say market veterans.

But if somehow had you accidentally drifted into a smallcap fund and that is bleeding now, redeem and go on a holiday.


Data shows mutual fund SIPs can hold you in good stead amid such headwinds. On an average, smallcap, midcap, technology, tax-saving, multicap, infrastructure and FMCG-oriented funds have delivered annualised return of between 16 per cent and 30 per cent over the past five years.

For instance, a monthly SIP of Rs 1,000 in Escorts High Yield Equity Fund since May 2015 would have now become Rs 45,513. Mirae Asset Emerging Bluechip Fund would have turned the same amount into Rs 49,126 at present.

People accumulating savings should just keep calm and carry on. Do nothing, just carry on with your SIP, advises Dhirendra Kumar, CEO, Value Research, a mutual fund research outfit.

SIP is a great vehicle for somebody who can witness and withstand such declines and accumulate at lower levels.

“You must ensure that you are investing at least for a three- to five-year time horizon and do not look at the NAV on a day-to-day basis,” Kumar said.

Equity benchmark BSE Sensex plunged over 1 per cent in last three sessions on rising crude oil prices and a falling rupee. Brent crude surpassed the $80 a barrel mark for the first time since November 2014.

Sanjiv Bhasin of IIFL said, “Rising crude, bond yield and falling rupee are impacting the market right now. There is still a lot of value creation waiting to happen in the midcap space. Investors can focus on this space.”

The BSE Midcap and Smallcap indices are now 12 per cent and 13 per cent, respectively, away from their all-time high levels touched in January this year, whereas BSE Sensex is just 3.55 per cent shy of its all-time high mark.

“If you have accidentally drifted into smallcap funds and made money and you are witnessing a decline in the value of your investment, take your money out and go on a holiday,” Kumar said.

He says investors should not try to time the market and think it has bottomed out and now is a time to invest. “Work on any method, but be a regular investor,” he said.

Kumar prefers funds such as Principal Emerging Bluechip, SBI Magnum Multicap and L&T Midcap. In the smallcap space, he likes DSP BlackRock Small Cap Fund, Reliance Small Cap and SBI Small Cap Fund.