Despite Friday's crash, Sensex is up over 6,000 points from April’s low. Time to reconsider your SIP strategy?

Rising India-Pakistan tensions jolted D-Street investors on Friday, with the Sensex ending 589 points lower. However, the BSE Sensex is still up 6,075 points from its April low, having reached 79,801 on Thursday. Market experts advise that SIPs and STPs should continue uninterrupted, as they are effective tools for navigating market volatility.

“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.

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.

“We look for opportunities to buy good businesses at fair valuations. The recent correction offers such opportunities. More in large cap space and fewer in mid & small caps as well,” recommended Sorbh Gupta, Senior Fund Manager – Equities, Bajaj Finserv AMC.

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.

On the other hand, Gupta mentions that, “We believe in FY26 domestic-oriented sectors, especially mass consumption, and companies focusing on rural consumption should do well. Even domestic pharma is the space that could do well.”

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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