Is it the right time to buy equity-based funds in one shot or wait for a dip in the markets? Alternatively, should we start a systematic investment plan (SIP)? —Sudhir Rana
Trying to time the markets is a tough ordeal in the best of times, and these are not the best of times in this regard. There are macro-economic events such as the US election results, advent of the Goods and Service Tax (GST), and the demonetisation that could impact the market in the near term. In historic terms, the current market appears to be slightly over-valued.
However, in the medium to long term, both the India specific factors are expected to have a positive impact on the economy in general and the earnings growth of companies in particular.
The big question amidst all this for an investor is if the equity market will choose to stay with the events or try to run ahead of it. Such a question always arises in such situations, although the actual events that influence this question may vary from time to time. If the market chooses to stay with the events, we might see a correction in the near term; but if the market chooses to look ahead and factor in the future potential in an optimistic manner, we will see a continued uptick in the stock prices and market valuation. So, the short answer to your question as to whether now is a ‘good time’ to invest lump sum or wait a while is: unfortunately, we don’t know for sure.
