CEO Speak August 2021
The Indian equity markets continued to scale new heights in August with the Nifty crossing 17,000 levels and Sensex crossing the 57,000 mark after being range bound in the previous few months. The domestic indicators are building a comforting and positive environment for businesses and industry which are now moving towards getting back to “close to normal”. The increase in vaccination rates and the dipping infection rates have given confidence to the government to open up cautiously. This has boosted the level of economic activities across sectors and geographies.
The last two years of the pandemic has been quite remarkable globally as well as for the Indian markets which swung from despair and uncertainty to recovery and hope. We at L& T Mutual Fund have throughout asked our investors to stick to their financial goals with regular and systematic investing.
SIP flows have also gained traction in the last months with July inflows at Rs 9,609 Crs compared to Rs 9,155 Crs. While the equity markets have shown an upward trend in the last 1.5 years, there has been volatility and a lot of investors had booked profits as high levels thinking that these levels may not be sustainable. With the 50,000 + levels being sustained for the past several months, increase in SIP inflows is a good indicator of retail investor confidence into the equity markets. Similarly, multi-cap, mid cap and small cap funds are also showing increase in investments.
We would like to re iterate the advantage of investing in the equity markets through systematic investment plans at this juncture.
It inculcates the habit of saving and investing regularly. This also means if you start early, your disciplined systematic savings help you to create wealth as you keep adding to the corpus at regular intervals.
You need not worry about timing the market -At times when the markets are high, your monthly SIP buys you less number of units of a mutual fund. When the markets are low, the same monthly SIP amount buys you more units. This is called the rupee cost averaging where your cost of investment gets averaged out as you are investing equal sums through all cycles of the market.
Power of compounding - As you keep adding to the corpus every month - the returns have compounding effect on a regular growing corpus which helps you create wealth. There is a lot of data out there to verify how investors who have been doing SIP in small amounts over the past 15 years have a corpus worth a very good amount in lacs now. Power of compounding plays a huge role when you have a good 15-20 years of investment horizon like when you are planning for your retirement.
As we step into the festive season, we urge all our investors to review their portfolios , take stock and invest as per your financial goals . Do not let the doubts of uncertainty derail you from your investment goals. Diversify into different asset classes as per your risk appetite but please do not base your investment decisions on panic of a downturn or over exuberance of an upturn.
Stay Safe, Stay Invested and Happy festivities.
Source: AMFI, BSE