It’s finally here. On 3 April 2025, US President Donald Trump unveiled trade tariffs on the rest of the world. Any hopes of a quick market rebound have been dashed, say market experts. Already equity markets have been under pressure after a near-uninterrupted, multi-year uptick. Mid- and small-caps, particularly, have been burnt badly. Even though the stock market witnessed a rebound of sorts in recent weeks, uncertainty prevails. Gold, on the other hand, has been soaring, as the precious metal’s allure as a safe-haven asset intensifies. Meanwhile, fixed income has continued to fetch a stable return. Those who had material gold and fixed income allocation in their portfolios are doing somewhat better than others.
The big question is: where will the market go from here? It may easily swing back into action and begin its next phase of growth. On the flipside, it may continue to trend downwards or take a long-winding path to recovery. While market experts ponder, what we know is that every correction in stock markets is an opportunity to buy—within your asset allocation, of course. ET Wealth reached out to market experts to guide on where you should invest your money, now.
Also read | Gold investment: Should you start investing in gold like the central banks as global financial order shifts?
RESET EXPECTATIONS
Experts insist that investors need to proceed cautiously. Now is not the time to be overly adventurous in your investment choices. Between 2 January and 4 March, the S&P BSE Sensex fell by 9%, then recovered by 7% by 25 March. However, any rebound in the stock market may prove to be short-lived, if global uncertainties persist and domestic slowdown continues. Don’t be misled by the nature of market corrections in recent years. The market hasn’t seen a sustained fall for long, while recoveries have been swift.
Markets recover, but can take time
Historically, large market falls (of more than 30%) and subsequent recoveries have taken around two years, but a few have spanned four-five years.
No big market shocks in recent years have led many investors into believing they can handle stock market volatility, simply because they haven’t seen much, so far. Many have now come to expect the market to get back on its feet and climb higher. But history should serve as a warning sign. While the magnitude of the 2008 crash has not yet faded from investor memory, there have been instances of much longer, drawn out corrections (see graphic). You can’t always count on a swift market recovery. Raghvendra Nath, MD, Ladderup Asset Managers, urges, “While markets have shown an upward trend in recent weeks, it is crucial to remain vigilant as the sustainability of this rally depends on factors such as upcoming corporate earnings and the global economy.”
A worse mistake would be to stop your investments or exit. That will halt your wealth creation. Vivek Banka, Founder, GoalTeller, cautions, “Over the near-term investors would do well to survive and ensure they stay in the game as structural tailwinds for the Indian economy remain strong.” Akhil Rathi, Senior Vice President, Financial Concierge at 1 Finance, exhorts, “Market volatility may seem unsettling in the short term, but over the long term, such fluctuations are both normal and necessary for wealth generation. What truly matters is your commitment to a diversified investment plan, avoiding impulsive decisions, and conducting periodic (not obsessive) portfolio reviews.”
Also read | 3 power sector stocks likely to gain in 2025 as electricity demand, government support rise
Coming out of a multi-year market rally, investors also need to reset their expectations. Inderbir Singh Jolly, CEO-Wealth, PL Capital, remarks, “The upward journey will be gradual, and investors will need to be highly selective in choosing stocks. Small caps and microcaps, which were trading at valuations of 40-50 times earnings, are unlikely to rebound quickly. This year, it will be a stock-picker’s market.”
The ongoing market correction should also serve as a lesson on chasing returns. According to FundsIndia, six out of 10 top performing funds of 2019-2021 are currently not even among the top 100. Only two schemes remain in the top 20. Similarly, only one out the top 10 performing schemes for 2022-2024 was also among the ten for 2019-2021 (see graphic). “Many broad categories’ top performers are now at the bottom of the charts. No one remains at the top for long and winners keep rotating. So investors should be careful when chasing returns alone,” insists Juzer Gabajiwala, Director, Ventura Securities.
Investors need to recalibrate and revisit previous portfolio decisions and goal-related math. Banka avers, “Investors should revisit their asset allocations, liquidity and financial goals to determine an asset allocation mix that is best suited to them. Ensure you don’t allocate any equities for funds that are earmarked for goals less than three years.” Banka reckons gold and fixed income should do well in the near term. As the economy slows, further interest rate cuts seem imminent, which will lead to debt funds generating good returns. Jolly maintains that the priority now should be to diversify investments, focus on quality large-caps, take a staggered approach if investing in a mid- or small-caps, maintain some liquidity, rebalance portfolio and stay updated on the events happening domestically and globally.
Maintain prudent asset allocation
While returns from individual asset classes may fluctuate, a well diversified portfolio can protect the drawdowns and deliver smoother return experience.
AGGRESSIVE INVESTORS
TAKE CALIBRATED RISK
For investors with a high-risk appetite who are able to stay invested through market cycles, this correction could be a blessing. “Waiting for the perfect time to invest is a myth—the best time is now,” insists Rathi.
Avoid putting in big lumpsums for now. Continue to invest in a staggered manner via SIPs. Top-up your SIPs regularly. Banka asserts, “The current decline and any further falls offer a great opportunity for investors looking at long term time horizons to deploy their money into equities.”
Given the risk profile and long-term investment horizon, experts suggest allocating a significant portion (around 75%-80%) of the portfolio to equities. “With a long-term horizon, aggressive investors can afford to take calculated risks. Equities have historically delivered superior returns, making them essential for wealth creation. However, diversification remains key, even for risk-tolerant investors,” observes Rathi. He urges aggressive investors to shun excessive risk-taking. “Don’t go all-in on mid- or small-cap stocks chasing high returns. Avoid thematic or sectoral funds unless you thoroughly understand the trend.”
Avoid chasing recent winners
Best performing funds keep rotating every few years, so it is futile to keep chasing past winners.
HOW THE PREVIOUS 30 TOP FUNDS FARED IN THE SUBSEQUENT 3-YEAR PERIOD
HOW TODAY’S 30 TOP FUNDS FARED IN THE PRIOR 3-YEAR PERIOD
Period considered from 3 Jan 00 to 31 Jan 25. Ind Equity: Nifty50 TRI; US Equity: S&P 500 TR; Gold price: Gold.org, Debt: Average returns of ABSL Low Duration Fund, HDFC Low Duration Fund & ABSL Corporate Bond Fund. Portfolio rebalanced at the end of every year provided the allocation deviates by +/-5% | Source: FundsIndia
Nath suggests a tilt toward large-cap (30%), flexi-cap (20%) and multi-cap funds (20%) while the rest may be parked in mid-cap and small-cap funds (around 15% each). Jolly suggests a balanced asset allocation within equities. “A substantial portion of the investable sum may be invested in equities with a diversified approach across market caps i.e. 50% large-caps, 30% mid-caps and 20% small-caps.” Beyond this, he suggests 20-25% allocation to debt instruments like high-quality corporate bonds and G-secs, performing credit and special situation funds. Another 5% allocation can be in gold via ETFs.
Banka cautions that aggressive investors should remain vigilant and consider taking some money off the table as their financial goals draw closer. “As you near any long-term goal, start exiting equity investments through a Systematic Withdrawal Plan (SWP), ideally a year in advance, spread over 12 equal monthly tranches,” he advises.
CONSERVATIVE INVESTORS
DON’T SHUN RISK ALTOGETHER
For investors averse to market volatility and capital erosion, a cautious stance is recommended. Particularly, those who have experienced a correction for the first time, and found they don’t have the stomach for it, should descend a few notches down the risk ladder. If you feel the urge to redeem and exit equities, your threshold of risk is clearly low. “For conservative investors, a lower equity and higher fixed income allocation is suggested as they might not fare well with too much volatility,” Banka says. Yet, even conservative investors, with a 10-year investment window, can afford moderate risk to outpace inflation. “Safety doesn’t mean avoiding growth—it means being selective and strategic with risk exposure,” Rathi insists. “Don’t completely avoid equities—even a 15–20% allocation can significantly boost long-term returns.”
Nath suggests a mix of multi asset funds (25-30%), conservative hybrid funds (30-40%) and debt funds (30-40%). “This portfolio would be relatively less volatile compared to an equity-heavy portfolio, with the debt component offering stability in returns. Opting for multi-asset funds is also more tax-efficient compared to dynamically managing asset allocation at an individual level,” Nath explains. Jolly favours a 70-75% fixed income-centric allocation, with another 15-20% parked in quality large caps as well as 5% in gold.
Apart from this, for investments earmarked for less than three years, Banka suggests exploring a mix of arbitrage funds, liquid funds, short term funds and high-quality corporate bonds with low maturities. For both aggressive and conservative investors, Banka cautions against pursuing international exposure due to the uncertainty in the global markets.
The big question is: where will the market go from here? It may easily swing back into action and begin its next phase of growth. On the flipside, it may continue to trend downwards or take a long-winding path to recovery. While market experts ponder, what we know is that every correction in stock markets is an opportunity to buy—within your asset allocation, of course. ET Wealth reached out to market experts to guide on where you should invest your money, now.
Also read | Gold investment: Should you start investing in gold like the central banks as global financial order shifts?
RESET EXPECTATIONS
Experts insist that investors need to proceed cautiously. Now is not the time to be overly adventurous in your investment choices. Between 2 January and 4 March, the S&P BSE Sensex fell by 9%, then recovered by 7% by 25 March. However, any rebound in the stock market may prove to be short-lived, if global uncertainties persist and domestic slowdown continues. Don’t be misled by the nature of market corrections in recent years. The market hasn’t seen a sustained fall for long, while recoveries have been swift.
Markets recover, but can take time
Historically, large market falls (of more than 30%) and subsequent recoveries have taken around two years, but a few have spanned four-five years.
No big market shocks in recent years have led many investors into believing they can handle stock market volatility, simply because they haven’t seen much, so far. Many have now come to expect the market to get back on its feet and climb higher. But history should serve as a warning sign. While the magnitude of the 2008 crash has not yet faded from investor memory, there have been instances of much longer, drawn out corrections (see graphic). You can’t always count on a swift market recovery. Raghvendra Nath, MD, Ladderup Asset Managers, urges, “While markets have shown an upward trend in recent weeks, it is crucial to remain vigilant as the sustainability of this rally depends on factors such as upcoming corporate earnings and the global economy.”
A worse mistake would be to stop your investments or exit. That will halt your wealth creation. Vivek Banka, Founder, GoalTeller, cautions, “Over the near-term investors would do well to survive and ensure they stay in the game as structural tailwinds for the Indian economy remain strong.” Akhil Rathi, Senior Vice President, Financial Concierge at 1 Finance, exhorts, “Market volatility may seem unsettling in the short term, but over the long term, such fluctuations are both normal and necessary for wealth generation. What truly matters is your commitment to a diversified investment plan, avoiding impulsive decisions, and conducting periodic (not obsessive) portfolio reviews.”
Also read | 3 power sector stocks likely to gain in 2025 as electricity demand, government support rise
Coming out of a multi-year market rally, investors also need to reset their expectations. Inderbir Singh Jolly, CEO-Wealth, PL Capital, remarks, “The upward journey will be gradual, and investors will need to be highly selective in choosing stocks. Small caps and microcaps, which were trading at valuations of 40-50 times earnings, are unlikely to rebound quickly. This year, it will be a stock-picker’s market.”
The ongoing market correction should also serve as a lesson on chasing returns. According to FundsIndia, six out of 10 top performing funds of 2019-2021 are currently not even among the top 100. Only two schemes remain in the top 20. Similarly, only one out the top 10 performing schemes for 2022-2024 was also among the ten for 2019-2021 (see graphic). “Many broad categories’ top performers are now at the bottom of the charts. No one remains at the top for long and winners keep rotating. So investors should be careful when chasing returns alone,” insists Juzer Gabajiwala, Director, Ventura Securities.
Investors need to recalibrate and revisit previous portfolio decisions and goal-related math. Banka avers, “Investors should revisit their asset allocations, liquidity and financial goals to determine an asset allocation mix that is best suited to them. Ensure you don’t allocate any equities for funds that are earmarked for goals less than three years.” Banka reckons gold and fixed income should do well in the near term. As the economy slows, further interest rate cuts seem imminent, which will lead to debt funds generating good returns. Jolly maintains that the priority now should be to diversify investments, focus on quality large-caps, take a staggered approach if investing in a mid- or small-caps, maintain some liquidity, rebalance portfolio and stay updated on the events happening domestically and globally.
Maintain prudent asset allocation
While returns from individual asset classes may fluctuate, a well diversified portfolio can protect the drawdowns and deliver smoother return experience.
AGGRESSIVE INVESTORS
TAKE CALIBRATED RISK
For investors with a high-risk appetite who are able to stay invested through market cycles, this correction could be a blessing. “Waiting for the perfect time to invest is a myth—the best time is now,” insists Rathi.
Avoid putting in big lumpsums for now. Continue to invest in a staggered manner via SIPs. Top-up your SIPs regularly. Banka asserts, “The current decline and any further falls offer a great opportunity for investors looking at long term time horizons to deploy their money into equities.”
Given the risk profile and long-term investment horizon, experts suggest allocating a significant portion (around 75%-80%) of the portfolio to equities. “With a long-term horizon, aggressive investors can afford to take calculated risks. Equities have historically delivered superior returns, making them essential for wealth creation. However, diversification remains key, even for risk-tolerant investors,” observes Rathi. He urges aggressive investors to shun excessive risk-taking. “Don’t go all-in on mid- or small-cap stocks chasing high returns. Avoid thematic or sectoral funds unless you thoroughly understand the trend.”
Avoid chasing recent winners
Best performing funds keep rotating every few years, so it is futile to keep chasing past winners.
HOW THE PREVIOUS 30 TOP FUNDS FARED IN THE SUBSEQUENT 3-YEAR PERIOD
HOW TODAY’S 30 TOP FUNDS FARED IN THE PRIOR 3-YEAR PERIOD
Nath suggests a tilt toward large-cap (30%), flexi-cap (20%) and multi-cap funds (20%) while the rest may be parked in mid-cap and small-cap funds (around 15% each). Jolly suggests a balanced asset allocation within equities. “A substantial portion of the investable sum may be invested in equities with a diversified approach across market caps i.e. 50% large-caps, 30% mid-caps and 20% small-caps.” Beyond this, he suggests 20-25% allocation to debt instruments like high-quality corporate bonds and G-secs, performing credit and special situation funds. Another 5% allocation can be in gold via ETFs.
Banka cautions that aggressive investors should remain vigilant and consider taking some money off the table as their financial goals draw closer. “As you near any long-term goal, start exiting equity investments through a Systematic Withdrawal Plan (SWP), ideally a year in advance, spread over 12 equal monthly tranches,” he advises.
CONSERVATIVE INVESTORS
DON’T SHUN RISK ALTOGETHER
For investors averse to market volatility and capital erosion, a cautious stance is recommended. Particularly, those who have experienced a correction for the first time, and found they don’t have the stomach for it, should descend a few notches down the risk ladder. If you feel the urge to redeem and exit equities, your threshold of risk is clearly low. “For conservative investors, a lower equity and higher fixed income allocation is suggested as they might not fare well with too much volatility,” Banka says. Yet, even conservative investors, with a 10-year investment window, can afford moderate risk to outpace inflation. “Safety doesn’t mean avoiding growth—it means being selective and strategic with risk exposure,” Rathi insists. “Don’t completely avoid equities—even a 15–20% allocation can significantly boost long-term returns.”
Nath suggests a mix of multi asset funds (25-30%), conservative hybrid funds (30-40%) and debt funds (30-40%). “This portfolio would be relatively less volatile compared to an equity-heavy portfolio, with the debt component offering stability in returns. Opting for multi-asset funds is also more tax-efficient compared to dynamically managing asset allocation at an individual level,” Nath explains. Jolly favours a 70-75% fixed income-centric allocation, with another 15-20% parked in quality large caps as well as 5% in gold.
Apart from this, for investments earmarked for less than three years, Banka suggests exploring a mix of arbitrage funds, liquid funds, short term funds and high-quality corporate bonds with low maturities. For both aggressive and conservative investors, Banka cautions against pursuing international exposure due to the uncertainty in the global markets.
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