Start new mutual fund SIPs: Market gurus tell investors

BENGALURU: Financial advisers advise retail investors to weather out Friday’s stock market rout, eerily reminiscent of the worst days of the 2008 financial crisis.

“Retail investors must follow the path of asset allocation. In times of such high market volatility, there should be the right balance between greed, panic and prudence. A disciplined approach over time will give benefits. Remember, the markets corrected in 2003 with SARS. Ebola and Zika also had some impact,” said Kotak AMC MD Nilesh Shah.

Analysts also said it is a good time now to set aside some money for MFs and systematic investment plans, instead of taking a direct bet on equities for those with a lower risk appetite. “SIPs would be the way to go. I’d say allocating 10-20% of one’s disposable income towards this for the next 2-3 years would be a good idea, as the current market is about waiting it out, and the long haul,” said Emkay Investment Managers CEO Vikaas Sachdeva.

Dalal Street observers also say the coronavirus will not affect the markets the way the financial crisis did.

“The 2008 crisis was primarily about the markets. That time, there were derivatives built, which overnight lost value, having a ripple effect and plunging shares in the US and globally. This crisis resembles more the 2019 trade war or SARS 2003, because it’s largely about supply chain disruption and impacts production companies,” said Emkay Global head (research) Dhananjay Sinha. “I’d say domestic inflows still remain stable. And stocks are likely to recover in two-three months,” Sinha added.

Industry observers also said this would be a good time to buy cheap stocks. “I’d say one ought to buy when prices fall. China has sufficient stocks in place. They can easily sell the goods. But they are holding on to them for prices to rise further before selling at a profit. So, now might be a good time to invest in Chinese companies,” said Cyrus Khambata, board member, Paytm Money and former MD of CDSL. “It is also a good time to buy non-production Indian companies. Markets are certain to make a recovery,” added Khambata. Agreeing with his assessment, Sachdeva quoted Warren Buffett’s line: “The time to buy is when there’s blood in the streets”.