Stock markets continue to swing wildly: Should mutual fund investors worry? Experts say this

Stock markets around the world have been experiencing extreme wild swings in the last few days after US President Donald Trump announced sweeping tariffs on goods imported from the rest of the world. India’s benchmark indices, the Sensex and the Nifty 50, ended 3 per cent lower on Monday. Barring HUL and Zomato, all stocks from the 50-pack Nifty closed with losses. Most of these stocks, however, recouped the losses on Tuesday. The BSE Sensex and the Nifty 50 rose 1.49 per cent and 1.69 per cent, respectively.

Given this volatile situation, wealth advisors continue to urge investors to remain calm and patient. The advice works for long-term and medium-term investors.

“Trump tariffs may shake the markets, but market dips are not a reason to panic—they’re an opportunity to invest wisely. Keep your Mutual Fund SIPs going strong, stay disciplined, think long-term, and wait for the right time to invest through a lump sum,” says CA Deepak Gupta, Founder of Finvestmentpro.

Say no to panic

Wealth advisors tell investors not to panic and remain invested if they have a financial goal that will expire in the next three to five years.

“The correction caused a panic in retail investors who were experiencing volatility for the last six months. Many new entrants who started investing post-COVID never saw such steep corrections in the share market. This leads to shaking their confidence and creates self-doubt. But retail investors should understand that such volatility is a part and parcel of equity investments. That's why you should invest in an equity asset class only for your long-term goal so that you can keep invested even in such a volatile situation,” says Preeti Zende, founder of Apna Dhan Financial Services.

In its latest quarterly report, Union Mutual Fund has upgraded Indian equity markets to the 'attractive zone' in its Fair Value Spectrum (FVS) indicator.

Harshad Patwardhan, Chief Investment Officer of Union Asset Management Company, said, "While short-term challenges such as global geopolitical tensions and trade-related uncertainties persist, India’s long-term macroeconomic fundamentals remain strong. Healthy corporate and banking sector balance sheets, prospects of a demand revival fuelled by tax relief and expanded welfare schemes, and the potential onset of a new private capex cycle are key positives driving for our outlook.”

Muted impact on Indian economy

Experts assert that the trade war is likely to have a muted impact on the Indian economy. "Trade war is a big thing but since India is not an export economy and only 10 percent of our GDP comes from exports with 20 percent to the USA. This means only 2 percent of the GDP comes from export to the US. Moreover, US is expected to tone down its position on tariffs in the long run because the tariff war will lead to considerable impact on the US economy," says Chokkalingam G, Founder, Equinomics Research Private Limited, Mumbai.

Long-term investing is key

Another expert points out that those investors who invested in the last one year are among the most worried.

Sridharan S, a Sebi-registered investment advisor and founder of Wealth Ladder Direct, says, “Yesterday's downfall has left most investors perplexed. It has a ripple effect on financial advisors as well because they are the ones who face investors. During the global crisis, markets took two years to recover and during Covid-19, it took a shorter period i.e., between 6 to 8 months. This time, the market correction started in October. It corrects, then it rises again. Every correction is an opportunity to buy more. Those who started investing last year have negative returns in their portfolio. But when you see from the next 3-5 years perspective, investors should stay invested.”

Zende also points out that the financial goal's time period also matters. “If you are investing for your retirement, for kids' education and marriage goal, which is more than 10-plus years away, then you should remain calm and patient and continue investing. For a goal which is up to three years away, you do not invest in equity mutual funds at all. You should choose only fixed-income instruments,” she adds.

Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.