Is it the right time to invest in mutual funds today amid volatility in the Indian stock market? EXPLAINED

Stock market today: The Indian stock market plunged nearly 4 per cent on Monday amid rising global trade tensions and renewed concerns about a potential US recession. This sharp decline wiped out approximately ₹14 lakh crore in investor wealth, leaving many portfolios flashing red. As a result, investors are now questioning their strategies and wondering how to navigate these uncertain times.

While the sharp slump in the global markets, including India, was triggered by the US President Donald Trump’s announcement of broad tariffs, analysts believe that India remains relatively better-placed than other emerging markets peers, thanks to the comparatively lower US tariffs it faces.

However, given the high volatility, experts advise mutual fund (MF) investors to proceed with caution and avoid making significant buying or selling during this period of market volatility.

Is it the right time to invest in Mutual Funds?

Manikaran Singal, Founder goodmoneying.com, says that just because the stock market has crashed and equity mutual funds' NAVs have fallen to an attractive level, one should not start investing in equity mutual funds.

Singhal further insisted that the time horizon is the most important factor to consider while investing in mutual funds. “If someone has a time horizon of seven years or more, then only one should go for the mutual fund's SIP,” he said.

He further explained that those with at least three years' perspective can use equity savings funds. “Those investors with less than a three-year time horizon are advised to remain away from equity mutual funds. Balanced advantage funds are advised instead of mutual funds SIP for an investor with a three to five-year time horizon,” he added.

Mutual funds safe bet amid volatile market

SIP investors in mutual funds earn returns based on the average NAV over their investment period. During market downturns, when the NAV drops, investors receive more units for the same monthly investment. Similarly, when the market recovers and NAV rises, they receive fewer units for the same SIP amount.

“Mutual fund SIP investors need not bother about the stock market crash, and current volatility provides a window of opportunity for fresh equity investors to start a new mutual fund SIP,” said Jitendra Solanki, a SEBI-registered tax and investment expert, taking a different view from Singal.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.