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16 Mar 2026
Synopsis
Indian stock markets, including BSE Sensex and Nifty, have seen significant declines. Experts advise investors to maintain discipline by continuing Systematic Investment Plans (SIPs). They suggest focusing on established equity funds and diversifying with large-cap, flexi-cap, and multi-asset allocation funds. Gold and silver funds can also offer diversification. Investors should avoid short-term market predictions and focus on long-term goals.
With the benchmark index - BSE Sensex - down by 8,000 points in one month and closing at the level of 74,563 on Friday i.e. March 13, market experts recommend a mix of large cap, flexi cap, multi asset allocation funds and continuing SIPs in the volatile market.
Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance shared with ETMutualFunds that investors should focus on established equity funds with a strong track record, rather than new themes or recent fund launches and a mix of large-cap, flexi-cap, multi-asset, and balanced advantage funds can provide stability during market downturns as market corrections offer opportunities to gradually build a portfolio of high-quality funds.
Minocha further said to continue SIPs to benefit from cost averaging during market volatility. If you have surplus funds for at least five years, consider selective lump-sum investments. At this point, staggered lumpsum payments for funds not required for at least 5 years are also a good option. On average, we have seen such opportunities every 6 to 7 years, and such opportunities should not be missed.
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Subhendu Harichandan, Executive Director, Anand Rathi Wealth Limited told ETMutualFunds that when benchmark indices remain under pressure, investors should avoid trying to predict short term market levels and instead focus on building exposure through diversified equity mutual fund categories such as flexi cap, multi cap and large and mid cap funds in such phases.
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Fresh allocations should therefore be directed towards diversified equity funds while ensuring the overall portfolio remains aligned with long term goals, SIPs should remain the primary route for most investors, especially during uncertain or volatile market phases and investors who have lumpsum money can consider staggering their investments over the next 6 to 8 weeks rather than deploying the entire amount at once, Harichandan further said.
Historical trend
On February 13 the benchmark index was at the level of 82,626, and went down 10% in one month to close at 74,563. The BSE Sensex has gone down nearly 3,642 points in the last four trading sessions from a level of 78,205 on March 10 to 74,563 on March 13.
In the last three months, Sensex has dropped 10.83% and 7.17% in the last six months. In the current calendar year so far, the benchmark index has gone down 11%.
The other benchmark index - Nifty has also gone down 2,320 points in the last one month. In the last three months, Nifty50 has dropped 9.24% and 5.87% in the last six months. In the current calendar year so far, the benchmark index has gone down 9.53% and has remained flat in the last 18 months. In the last 18 months, Nifty 50 went down 8.69% whereas Nifty 50 TRI went down 7.30%.
Which other categories are best for diversification?
Gold and silver funds are used for portfolio diversification. If you have a large portfolio, you can earmark a small percentage of the total portfolio (advisors say around 10%) to invest in gold and/or silver. If you are starting out or you have a very small portfolio, you can give it a miss, investors should remember that these funds won't offer you greater returns year after year. They are supposed to offer you diversification and add stability to your portfolio.
Multi-asset allocation funds invest across equities, debt and commodities such as gold and silver, offering built-in diversification within a single scheme. For many investors, this structure reduces the need to actively rebalance portfolios during uncertain market phases.
So should investors diversify their portfolios into asset classes such as gold, silver, or multi-asset allocation funds at this stage or pure equity categories work in such a scenario?
Harichandan said multi asset allocation funds can work well when they are the only investment in a portfolio, but investors with larger portfolios would benefit from building asset allocation across different schemes since multi asset funds will not give you control over your asset allocation. In terms of diversification, pure equity mutual funds should continue to form the core of long term portfolios, while gold can be considered as a replacement for debt exposure.
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Minocha said that allocating some assets to gold or multi-asset funds can enhance diversification, but equity should remain the primary focus for long-term wealth creation.
Markets have remained flat in the last eighteen months. Radhika Gupta, MD and CEO of Edelweiss Mutual Fund posted on social media platform X that the market hasn’t made money for 18 months and this kind of phase has happened before, but history shows it doesn’t last forever.
Citing data sourced from Edelweiss Mutual Fund, she highlighted that the data shows that while 18-month returns during these phases were modest or even negative, the following 12 months or the 36 months told a very different story. In several historical instances, the next 12 months delivered strong double-digit returns.
Even more importantly, the next 36 months after such stagnant periods often delivered solid gains.
Strategies to follow when markets remain flat for a prolonged period
Minocha said that sideways markets can be frustrating, but they often set the stage for future growth and investors should maintain discipline by continuing SIPs, avoiding unnecessary portfolio changes, and using downturns to add quality holdings as staying invested during stagnant periods is likely to be rewarded over the long term.
Harichandan said that investors should stay disciplined and continue their existing SIPs in such markets rather than reacting to such short term movements, in such phases where markets are volatile, investors can accumulate more mutual fund units at relatively lower prices and this period should also be considered as a good opportunity to review your asset allocation and market cap allocation.
He further said that ideally, investors should follow an 80:20 asset allocation across equity and debt, with the equity portion having 50–55% in large cap, 20–25% in mid cap and the rest in small cap to ride all market cycles smoothly.
A phase of consolidation or deeper concern
As the benchmark indices are down for a prolonged period and hasn’t made money in the last 18 months, Minocha said that the current market appears to be in a consolidation phase following strong performance through 2024, corrections every six to seven years are normal so investors should continue SIPs and avoid making emotional decisions based on short-term market movements.
Harichandran said that the decline in the Sensex and Nifty was mainly driven by geopolitical uncertainty in the Middle East and volatility in crude oil prices and investors should not be concerned as such falls in the market have occurred before and the impact on markets was temporary.
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Investors should stay disciplined and avoid reacting to every headline and they should ensure that their portfolio asset allocation is around 80% in equity and 20% in debt or gold, and such short term volatility should not change their long term investment strategy, Harichandran further said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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