Waiting for the right time to invest :There is pressure on the stock market. Selling is seen in the market due to geopolitical tension, global uncertainties and lack of clarity regarding interest rates. In the last one month, both Sensex and Nifty indices have fallen by more than 2.5 percent. Sensex fell from its peak of 85978 to the level of 81007, while Nifty fell from its peak of 26277 to 24750. In such a situation, there will be many investors who may be scared of entering the market or may be waiting for the right time. So is it right to wait for the right time after seeing the ups and downs in the market or are there investment opportunities in the market all the time, the strategy should be right. on these things Ajit Menon, CEO, PGIM India Mutual Fund Has given detailed information.
Strong journey of the market amidst ups and downs
The Indian stock market was started in 1986 and since then its entire journey has been very wonderful. In 2006, when the Sensex reached the level of 10,000 for the first time and it took more than 2 decades to achieve this position, in 2007 it took only one year to double i.e. from 10 thousand to 20 thousand. S&P BSE Sensex had crossed the level of 20 thousand in December 2007. However, the very next year it faced a recession and during 2008-10, the Sensex witnessed a decline of 61 percent (-61%).
Due to the recession, many investors got scared and during that time they started getting nervous about making new investments in the market or taking decisions about exiting the investment. But when the world recovered from this shock of recession, the Sensex once again reached its previous high level. It took a decade for the Sensex to rise from the level of 20 thousand in 2007 to the level of 30 thousand in 2017. In September 2024, Sensex achieved a new milestone by touching the level of 85000. This growth reflects broader economic changes in the Indian economy. India’s weightage in the MSCI Emerging Markets Index has increased from about 6% a decade ago to 20% in 2024 (Source: MSCI).
Fear of missing the rally
Due to continuous heavy investment by domestic investors in recent times, the number of days taken for the market to recover from the fall is decreasing. Therefore, investors waiting for time are at risk of missing out on the market rally. It has often been proven true that investing in market downturns can yield better returns for those investors who have the patience and confidence in the market to deal with the volatility.
Examining some data from January 2006 to September 2024, it was found that missing 5 days of the market’s best performance could result in loss to the portfolio with 3 percent less return. Whereas those who missed the 50 best days by staying invested got negative 1 percent (-1%) returns, that is, their returns went into negative. An easy way to overcome such a challenge is to invest through SIP, so that you do not miss out on the best days for the market.
Time Period |
Times |
CAGR (%) |
Entire Period |
11.68x |
14% |
Missing best 5 days |
7.34x |
11% |
Missing best 10 days |
5.39x |
9% |
Missing best 20 days |
3.13x |
6% |
Missing best 30 days |
1.93x |
4% |
Missing best 40 days |
1.27x |
1% |
Missing best 50 days |
0.87x |
-1% |
(Jan 2, 2006-Sep 25, 2024. BSE Sensex TRI)
Don’t be afraid of ups and downs and take decisions
It can be said that investors who did not immediately react to market related news or events by taking any action have achieved better returns than those who stayed out of the market due to fear of market fall or did not want to invest. Were waiting for the ‘right’ time.
Now is the right time to invest in the market
Recently there was a lot of talk about the market reaching its all-time peak. But the market has made its peak many times before also. Taking investment decision only after seeing the rise in the market can harm you. If you have never invested in equity and are waiting for the right time to invest when the market falls, then you may be left waiting. Instead, you can start investing by consulting your trusted financial advisor and making a goal to achieve it. Every time is right to start investing, so waiting for the right time is a wrong strategy.
What should investors keep in mind
, Having a goal-oriented investing strategy to follow helps you focus your entire investment journey, regardless of what’s happening in the market. If your current asset allocation has deviated from its target or is deviating from its target, then after consulting a financial advisor, you can make necessary changes in your asset allocation to achieve better results.
, Second, when you get closer to a goal, you can rebalance your portfolio. When your goal seems to be achieved, about 6 to 12 months before reaching the goal, you can start transferring your funds to a conservative hybrid fund to protect it from market vagaries.
, Third, you may consider making changes to your portfolio when your portfolio is underperforming or underperforming other schemes in the same category or your benchmark. Investors who want to make the most of volatility should also consider keeping some cash reserves with them for changes in asset allocation.
Where would be better to invest now?
For those worried about mixed signals on geo-political tensions, Sensex hitting new highs and persistent volatility, invest in equities through Balanced Advantage Funds/Dynamic Asset Allocation Funds or even Multi Asset Funds. It would be a good option to do. Because these funds have an in-built model to take asset allocation on your behalf and provide the benefit of diversification.