Right time to invest in equities; opt SIP route for investment: Experts

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Published: March 29, 2020 12:58:05 PM

The spread of the novel coronavirus and slump in international crude oil prices have eroded market sentiment and contributed to the high volatility in the equity markets.

SIP route, Indian stock markets, coronavirus pandemic, Nippon India Mutual Fund, exchange traded funds,  equity markets, sensexNippon India Mutual Fund ED and CEO Sundeep Sikka said investors should invest in exchange traded funds (ETFs) and index funds as these have certain amount of ‘assured liquidity’ due to the very structure of the product.

Indian stock markets have seen significant downtrend in recent weeks, amid the coronavirus pandemic tightening its grip in the country, but experts believe it is the right time to start investing in equities through SIP route for the long term as the current valuations are juicy.

They believe that healthcare and telecom sectors are expected to perform well in this prevailing situation. Nippon India Mutual Fund ED and CEO Sundeep Sikka said investors should invest in exchange traded funds (ETFs) and index funds as these have certain amount of ‘assured liquidity’ due to the very structure of the product. Yes AMC CEO Kanwar Vivek advised to stay invested in the markets and if liquidity is available with the clients then continue investing in a staggered manner keeping the long term horizon in mind.

The spread of the novel coronavirus and slump in international crude oil prices have eroded market sentiment and contributed to the high volatility in the equity markets. The benchmark Sensex crashed more than 12 per cent in this month so far, falling from 34,000 level to 29,000 level.

The current market valuations are juicy and hence attractive for long term investors…it is time to start investing in equities for the long term, he added. Echoing similar views, Amit Jain, CEO and Co-Founder of Ashika Wealth Advisors said, Bear markets are considered the best time to invest in stock markets. The worse the market’s performance is, the better returns you would get in the medium-long term.

He suggests new investors to allocate their 40 per cent corpus in Arbitrage funds, which may roughly give 7-8 per cent of return and 60 per cent should be parked in multi-asset and mid cap schemes for next six months. Satyen Kothari, Founder and CEO of Cube Wealth has suggested investment through systematic investment route (SIP) as it will balance investments and benefit from rupee-cost-averaging.

Given the current pandemic, Jain expects healthcare sector to perform extremely well, primarily testing laboratories.
Besides, telecom space will shine as everyone is working from home and there is a great demand for internet as well as voice calls along with entertainment services like Netflix and Amazon Prime as 21-day nationwide lockdown is in force to tackle the spread of coronavirus infection, he said.

The sectors that will be least affected include FMCG and real estate, among others, he added. Sikka said index funds as part of prudent investment are suitable for both first-time as well as seasoned investors. One can wisely use these opportunities in combination with actively-managed funds to build a solid long-term portfolio.

Index ETFs have a certain amount of ‘assured liquidity’ due to the very structure of the product. When markets recover, constituents of the benchmark index rally first before stocks outside the benchmark index follow. Every fall has been followed by a strong recovery and ETFs are the most appropriate option in the given scenario given the very design of the product, he added.

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