Sensex up 8,000 points from April's low. Should you reconsider your SIP strategy?

With the benchmark index -
BSE Sensex
- up 8,000 points from its April low level and reaching at the level of 79,801 on Thursday, a market expert recommends that SIPs and STPs should continue without interruption as they are good channels to negotiate market swings.
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'This is not the kind of time to rush and book profits, because it is a recovery rather than a structural rally. The tide is likely to turn again, and it may become volatile this year further too. Investors should not stop it at this time but hold the plan on which they make investments,' advised Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance.
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While recommending the
SIP strategy
for FY26, an expert recommended that this is a good time to begin SIPs and one should consider categories that offer diversified exposure.
'FY26 is a good time to begin SIPs. New investors can start with Multi-Asset, Flexi Cap, or Balanced Advantage Funds to get diversified exposure. Avoid starting with niche or high-risk segments like small caps initially,' recommends Sagar Shinde, VP of Research at Fisdom.
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RBI announced a rate cut of 25 basis points in its bi-monthly policy on April 9 and
Sensex
crossed the level of 80,000 on April 23. Post the rate cut and the benchmark index reaching this level, Minocha recommends that
portfolio rebalancing
should adhere to the original asset allocation model rather than conflicts set up immediately by high short-term market premiums.
If equities have performed way ahead of other assets and your asset allocation has drifted away from what your original asset allocation was then it may require an upward shift in some gains into debt to keep a fair level of balance is what Minocha further recommended.
In the current month, on April 7 the benchmark index was at the level of 73,137, the lowest in the current month so far. The BSE Sensex touched 80,000 levels on Wednesday and closed at 80,116.49 level extending its winning streak to a seventh session.
Benchmark index - BSE Sensex - touched its all-time high level on September 27, 2024. It touched a level of 85,978.25.
In the last five months, Sensex has gained 1.26% and 0.04% in the last six months. In the current calendar year so far, the benchmark index has gone up by 2.53% and by 4.17% and 4.69% in the last one and three months, respectively.
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With the benchmark on surge since last month, the expert advises that there is no need for particular strategies to book profits for a mutual fund investment and the long-term goals should stay in equities, while short and medium-term answers should go for debt or hybrid funds.
Of utmost importance, therefore, is aligning an investment with
financial goals
and time horizons, Minocha adds.
In April so far, small cap funds have taken the lead and have offered the highest average return of around 4.67%, followed by 4.13% by mid cap funds and 4.01% by multicap funds. Large cap funds have offered the lowest average return of 3.56% in the same period.
The investors who are looking to make investments can keep on making SIPs in multi-cap and flexi-cap funds for a minimum period of five years amid the market at high levels, the expert advises.
'SIPs and STPs are ways to average the costs and withstand volatility. What seems a market high might be a bargain in a few years. Keeping on investing with a reasonable expectation of returns of not more than 12% a year from long-term holding-is the best way forward,' Minocha added.
One should always invest based on their risk appetite, investment horizon, and goals.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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Mutual Funds
on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on
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