Investment strategies are under scrutiny as the Indian stock market grapples with significant downturns. The recent fluctuations on Dalal Street, especially affecting the Nifty50 and Nifty500 indices, have left many investors seeking safer avenues for their portfolios as global uncertainties loom.
On February 28, 2025, the Nifty50 was trading at 22,135.20, down 1.82% from previous sessions, reflecting the broader market’s challenges. Following the highs of September 26, 2024, the Nifty500 has plummeted over 17%, and the Nifty50 has dropped around 14%. A notable decline was witnessed on the last trading day when the Sensex sank by 1,000 points due to adverse global signals, particularly tariff threats from the United States, which have rattled investor confidence.
Given this market environment, investors are pivoting to mutual funds, which are favored for their capacity to balance risk and growth. Subho Moulik, Founder and CEO of Appreciate, highlighted the importance of large-cap funds, stating, "Large-cap funds invest in well-established companies, which typically fall less during market downturns." He pointed out the Canara Robeco Bluechip Equity Fund, which has consistently outperformed the Nifty 100 over the past five years.
Another key player is the ICICI Pru Nifty 50 Value 20 Index Fund, which selects 20 well-valued stocks from the Nifty 50 universe. Since September 2024, this fund has outperformed both the Nifty 500 and Nifty 100 indices significantly. It boasts an expense ratio of just 0.3%, making it more attractive than many actively managed funds.
For those considering passive investing, the Nippon India Nifty 50 Value 20 Index Fund is also recommended. It has successfully outperformed the Nifty 500 and Nifty 100 on 59.14% and 58.06% of occasions since last September, which serves as reassurance for cautious investors.
Flexi-cap funds represent another versatile investment option, appealing to those wanting exposure across various market capitalizations. Parag Parikh's Flexi Cap Fund has beaten the Nifty 500 88% of the time since September 2024, making it another solid option for investors. Similarly, the HDFC Flexi Cap Fund has demonstrated impressive results, outperforming the Nifty 500 80.2% of the time.
Financial analysts anticipate continued volatility, noting factors such as geopolitical tensions, tech sector performance, and earnings reports as contributors to instability. Sachin Jain, Managing Partner at Scripbox, stated, "Turbulent markets often come with increased liquidity risks, and investing in high-quality funds ensures stability and resilience." His suggestions include maintaining quality within investment portfolios amid these fluctuations.
Additional mutual fund recommendations include:
- SBI Medium Term Bond Fund for stable returns, especially favorable under current high interest rates.
- ICICI Floating Interest Rate Fund, ideal for adapting to changing interest rate conditions.
- HDFC Equity Savings Fund, combining equity exposure with debt for balanced risk management.
While investment strategies are being reshaped by the market's current state, the emphasis remains on quality and diversification. With the market corrections, many investors are exploring reliability and stability offered by funds like these. Investing across large, mid, and small-cap funds alongside bonds and hybrids can help balance risks effectively.
Conclusively, the Indian stock market downturn highlights the importance of choosing sound investment strategies. Amid the prevailing fluctuations, having the right mix of mutual funds and ensuring quality investments can mitigate risks and pave the way for capital growth as conditions improve.