Mutual Fund Strategy: Stock Market Overvalued? Here’s What You Can Do

Mutual Fund Strategy: Stock Market Overvalued? Here’s What You Can Do

Photos: Pixabay/Pexels

Photos: Pixabay/Pexels

Small, Mid Cap and several other funds continued to record high inflows in August even as the markets appear overvalued and due for some correction in near future.

Small, Mid Cap and several other funds continued to record high inflows in August even as the markets appear overvalued and due for some correction in near future.

Investors are being drawn to small and mid cap funds like never before. More so because mid-cap and small-cap indices have witnessed a surge in recent month.

Investors are being drawn to small and mid cap funds like never before. More so because mid-cap and small-cap indices have witnessed a surge in recent month.

In the one month period ended September 10, mid-cap 150 and small-cap 250 indices yielded about 8-9%, compared to 2% of the larger index Nifty50.

In the one month period ended September 10, mid-cap 150 and small-cap 250 indices yielded about 8-9%, compared to 2% of the larger index Nifty50.

In August, Nifty Small-cap 100 index jumped 4.6%, following up on the strong 8% return in July, 6.6% in June and 5.1% in May.

In August, Nifty Small-cap 100 index jumped 4.6%, following up on the strong 8% return in July, 6.6% in June and 5.1% in May.

Noticing the underperformance of broader markets at the beginning of 2023, investors have poured Rs.28,244 crore into mid and small-cap funds between April – August, 2023.

Noticing the underperformance of broader markets at the beginning of 2023, investors have poured Rs.28,244 crore into mid and small-cap funds between April – August, 2023.

While everything may look good on paper, the overall stock market has slowly moved into overvalued territory and investors should exercise caution.

While everything may look good on paper, the overall stock market has slowly moved into overvalued territory and investors should exercise caution.

Experts say the market cap to GDP ratio in India has risen above the 106% mark, venturing into the overvalued territory for the time being.

Experts say the market cap to GDP ratio in India has risen above the 106% mark, venturing into the overvalued territory for the time being.

Investors should look to avoid infusing fresh lump sum funds into the market, and instead, they should continue investing via SIP to counter any market correction of volatility in near term.

Investors should look to avoid infusing fresh lump sum funds into the market, and instead, they should continue investing via SIP to counter any market correction of volatility in near term.

What should you do?

What should you do?

Disclaimer: Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.

Disclaimer: Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.