Time To Invest In Lumpsum?

At present the market seems to be directionless and is down by 6 per cent from its recent lows. In such a scenario, investors often try bottom fishing and invest at the bottom to get maximum returns. Therefore, there is a general feeling that investing a lumpsum amount at this stage would make more sense. The article explains market valuation and whether or not at the current juncture investing a lumpsum amount would be the right approach

- 

In the wake of giving spectacular returns in the last one and a half years, the market (Nifty 50) halted to take a breather, sliding into a consolidation phase in November 2021. Nifty 50 made an all-time high of 18,604.45 in October 2021 before it moved into a corrective phase, making a low of 16,410 in December 2021. Thereafter, on January 18, 2022 it tried to breach its all-time high but failed to do so and continued on its southward journey once again. Nonetheless, post the Union Budget it started showing a good upward movement.

That said, the market is moving into a wide consolidation phase where the breaching of the price at either side of the range would suggest the next move of the market. As a result, at present the market seems to be directionless and is down by 6 per cent from its recent lows. In such a scenario, investors often try bottom fishing and invest at the bottom to get maximum returns. Therefore, there is a general feeling that investing a lumpsum amount at this stage would make more sense.

For those who are new to mutual fund investing, there are two ways one can invest in them: one-time investment via lumpsum or via a systematic investment plan (SIP) or systematic transfer plan (STP). Hence, in the following paragraphs, we will attempt to understand the market valuation and whether or not at the current juncture it makes sense to invest lumpsum. In the table below we have listed the lumpsum returns and SIP returns of the top 10 equity mutual funds in the last five-year timeframe.