How Indian equity investors are reacting to current stock market volatility

Just 10 years ago, when the stock markets crashed, the Indian equity investor went into a tizzy, selling stocks and exiting mutual fund SIPs in a tearing hurry. Then in 2015, when the markets witnessed volatility following global cues, there was very little knee-jerk reaction, indicating growing maturity on the part of the Indian investor. This gradual evolution of equity investors has been evident during the dips in the past few years, and is clearly on display during the current market correction of around 10%.

“I am a long-term investor and don’t churn my portfolio too much. In fact, I have continued with my mutual fund SIPs over the past few years. This time around, I want to take advantage of the correction and invest more in stocks as well as mutual funds,” says 53-year-old Neeraj Gupta.

After the markets fell, he invested Rs 2 lakh in balanced mutual funds and Rs 50,000 in stocks. The Sahibabad-based private service employee has a substantial equity portfolio of around Rs 35 lakh and is completely undisturbed by the current market volatility.

In Pic: Neeraj Gupta 53, Service, Sahibabad, UP
Existing equity portfolio: Stocks: Rs 18.2 lakh, Mutual funds: Rs 17.3 lakh
Plan of action: Stocks invested Rs 50,000 on 27 March 2018; Mutual funds invested Rs 2 lakh in balanced funds as a lump sum in last week of March.
“I’m a long-term investor but want to take advantage of the dip in the market and invest in stocks and mutual funds at low prices.”

A similar equanimity is being displayed by 31-year-old Rahul Sapra from Delhi. “I have been investing at every market correction. Since I have just received an increment, I want to benefit from the market dip and start with mutual fund SIPs of Rs 5,000 for my newborn,” he says. He is also planning to invest in stocks for the next six months.

In Pic: Rahul Sapra 31, Engineer, Delhi
Existing equity portfolio: Stocks: Rs 3.7 lakh, Mutual funds Rs 4.5 lakh
Plan of action: Stocks-investing Rs 3,000 in stocks every month for the next six months; Mutual funds-investing Rs 5,000 in a balanced fund via an SIP
every month.
“I have been investing at every market correction. As I have just got an increment, I want to invest in mutual funds for my newborn.”

Financial advisers agree to this action plan. “Market corrections are no time to panic or sell. When there is a dip of 10-15%, one should put more money in the market, instead of redeeming, and should continue with one’s SIPs,” says Financial Planner Pankaaj Maalde.

Bengaluru-based Manjunatha G.T. is doing just that. With his existing equity portfolio comprising only stocks worth Rs 5.1 lakh, the 33-year-old software developer is now considering investing via mutual fund SIPs as well. “Since the market has corrected by around 10%, I am considering investing Rs 1.5 lakh in stocks and am also planning to start three monthly SIPs of Rs 4,000 each in mutual funds in April,” he says.

In Pic: Manjunatha G.T. 33, Software developer, Bengaluru
Existing equity portfolio: Stocks Rs 5.1 lakh, Mutual funds Nil
Plan of action: Stocks investing Rs 1.5 lakh in shares of four companies in April; Mutual funds investing Rs 12,000 in tax-saving funds through three SIPs of Rs 4,000 each in April.
“Since the market has corrected by around 10%, I am planning to invest in stocks and mutual funds in April.”

“Unless you have a financial goal that is only about five years away, you should just consider reviewing and rebalancing your portfolio,” says Maalde. Only if the goal is less than five years away, should you consider moving away from equity to safer options in order to safeguard your capital.

The best strategy, of course, is to have an overall financial plan in place and invest in line with the goals, not being disturbed by short-term market noises. Investors should, of course, consider their asset allocation and manage the risk to the portfolio, making sure they are not exposed too much to one particular asset.

Market corrections are a part of the normal market cycle, a way for an overvalued market to right itself. Since these take place regularly and are typically short-lived, investors should not worry about these and stick to their financial plans.