Nifty Hits 23,000 After a Month: Should Mutual Fund Investors Hold or Rebalance?

The Nifty 50 index has once again crossed the 23,000 mark after a month. A mutual fund expert suggests that large and mid-cap funds, multi-cap funds, and flexi-cap funds are good options for investors who want long-term wealth creation and can handle market ups and downs.

For investors who have recently experienced the 10% market decline and learnt that investment in stocks is risky but still want to be exposed to equity for long-term growth, hybrid equity schemes or balanced advantage funds can be a prudent choice. Investors who want a diversified portfolio with investments in more than one asset class may also find such strategies useful.

In the past three trading sessions, the market has gained 2.27%, and in a week, it is up by 1.94%. However, over the last three months, the index dropped by 4.35% and is down by 3.11% in the current year. The decline was mainly due to weak corporate earnings, foreign investments shifting to China, and pro-U.S. market sentiment, as per a report from Tata Mutual Fund.

With the recent market fluctuations, experts suggest profit booking or reducing exposure to mid-cap and small-cap stocks, as their valuations are still higher than historical averages.

According to an expert, SIP (Systematic Investment Plan) and STP (Systematic Transfer Plan) investments should continue. Investors with a minimum five-year investment horizon can think of partial lump-sum investments, as the 14% market correction in the last five months has improved valuations.

However, patience is mandatory in the investment, as the market may still face declines due to global uncertainties and weak domestic earnings. Investors should set realistic return expectations of 11–13%, especially those who got used to very high returns after the pandemic.