Nifty50 @10,000; should mutual fund investors still wait for correction?

The Nifty 50 index touched the 10,000-mark for the first time in the opening trade today. However, there are many mutual fund investors still hoping for a correction and waiting for ‘better opportunities’ in the market. According to some mutual fund advisors, some existing investors are pulling out money from their schemes to reinvest it when a correction happens. These advisors believe that this might not be a wise investment strategy.

“Recently, I saw some investors pulling their money out because they want to invest when a better opportunity comes in the market. Pulling money out of your scheme and leaving it idle is at no point a wise decision,” says Puneet Oberoi, Founder, Excellent Investment Advisorz.

Mutual fund advisors typically ask investors not to fall into the trap of trying to time the market: buy when the market is low and sell when it is high; countless studies have proven that it is just a wishful thinking and nobody can time the market consistently over a long period. However, a sizeable pool of investors still believe they can do it.

“A lot of news and buzz about a likely correction in the near-term has led to these decisions. For retail investors, keeping their money idle is also a loss. No body can predict when the correction is going to happen or if it is going to happen or not,” says Pankaj Gera, Founder, Gera Wealth Creators.

Of late, there has been a lot of buzz about a likely correction due to high valuations in equity markets. “The valuations sure call for a correction, but when and how much, we can’t say. By taking out your money, you are missing out on the daily rally of the market,” says Puneet Oberoi.

Pankaj Gera says that investors can take such tactical calls but only when they have a fair knowledge of how the market functions. “Going by what others are saying and pulling your money out is not the best thing to do. Mutual funds are fundamentally for people who leave the job of managing their money to the fund managers. Majority of retail investors in India aren’t very aware of the financial sector, so this is just playing with your money,” says Pankaj Gera.

In the end, experts believe that you should not be adventurous or over-cautious about your money at this point in the market. Waiting for a correction which might come after a month, six months or a year and pulling your money out of your schemes is a bad idea. “The experts have been speaking about a halt in the rally of mid and smallcap stocks since almost three years now. But the same funds returned 30-40 per cent returns in the last one year,” says Oberoi.

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