NEW DELHI: Madhu Nair, CEO of Union Mutual Fund, advised investors to stay committed to their investments, asserting that the current market correction is merely a short-term distraction and that India's long-term growth narrative remains robust.
Nair’s advise comes in the wake of continued weakness in India's equity market, with the NSE Nifty and BSE Sensex having declined by approximately 9% in just over a month.
On Diwali (Thursday), the Sensex closed 553 points lower at 79,389, while the Nifty dropped 135.50 points to settle at 24,205.
"Investors often overestimate what markets can achieve in the short term and underestimate what they can deliver over the long term. We remain confident in India’s long-term fundamentals and its role in global portfolios. Over time, India is likely to emerge as a distinct asset class within global portfolios, rather than merely being an allocation. Therefore, we are optimistic about Indian equity markets from a long-term perspective and encourage investors to increase their equity allocations over the next 3 to 6 months, especially if they are under-invested in Indian equities," Nair told The New Indian Express.
He added that investors with regular income and cash flow should continue investing through the Systematic Investment Plan (SIP) route, and may even consider increasing their SIP contributions to accumulate more units and capitalise on the market correction.
"Mutual fund investors should adhere to their financial plans, which have been tailored to their needs by their advisors or distributors, rather than attempting to second-guess the market. Investors should stick to their plans, as the underlying fund portfolios are being monitored by experts, whose responsibility is to make necessary adjustments. At present, we are positive on IT, pharma, consumer discretionary, and telecom sectors," Nair added.
Addressing the market weakness, Nair said that short-term sentiment is influenced by near-term events and noise, such as the US elections, state elections, the Union Budget 2025, and the domestic rate cut cycle.
"Domestic institutional investor flows, including those from mutual funds, insurance, and the National Pension System (NPS), remain strong, indicating that investors broadly believe in India’s long-term structural story. However, foreign institutional investor (FII) flows have been a dampener, as other economies are attracting attention due to relative attractiveness. Investors should avoid being swayed by market sentiment, which can shift over time and holds little relevance in the long-term wealth creation journey of a mutual fund investor," Nair said.