CEO Speak August 2024

The Indian equity markets have been soaring to unprecedented heights, bringing excitement and exuberance to investors across the country. While it's natural to feel exhilarated by these gains, it's important to keep a level head and stay focused on your long-term investment strategy. As you can enjoy the benefits of a rising market, it is crucial that you remember the core principles that should always guide your investment journey.

Trust in the long-term potential of the markets:

The recent surge in the equity markets is an indicator of India’s economic strength and resilience of its financial markets. While the current market highs are encouraging, it’s essential to remember that fluctuations are a natural part of the investment landscape. When we celebrate these milestones, we must also be prepared for periods of correction. Trusting in the market’s long-term potential, rather than short-term fluctuations, is key to successful investing.

Stick to the basics:

• Diversification: Maintain a diversified portfolio that balances risk and reward across various asset classes. This strategy mitigates risks associated with market volatility and enhances the potential for long-term returns.
• Disciplined Investing: Continue with your Systematic Investment Plans (SIPs). SIPs help in averaging out the cost of investments over time, reducing the impact of short-term market movements. It’s a great tool for disciplined investing and long-term wealth generation.
• Financial goals: Keep your financial goals in focus. Whether it’s saving for retirement, your children’s education, or buying a home, ensure your investment strategy aligns with these financial objectives. Avoid making impulsive decisions based on short-term market trends.

Manage expectations:

The past one year has given some exceptional returns in the large cap, mid cap and small cap space. We are observing a trend in many investors who are coming in with very high return expectations. We would like to draw a word of caution here. These kinds of high returns are not sustainable, and the markets will go through cycles. Hence, it’s crucial to keep one’s expectations real and focus on the long-term game. Investing in the equity markets must be long term in nature with a time horizon of 5 years or more. Critical aspects to keep in mind are:

• Realistic Returns: High returns can be enticing but it's important to have realistic expectations. Equity markets are cyclical, and periods of high returns are often followed by corrections. Setting realistic expectations helps you avoid disappointment and stay committed to your investment plan.
• Avoid Emotional Decisions: Emotional investing can lead to poor decisions. It's easy to get swayed by market highs, but maintaining a disciplined approach is crucial. Stick to your investment plan and avoid making impulsive changes based on short-term market movements.

Indian equity markets continued their strong upward trajectory in Jul’24. India’s growth momentum and outlook remain strong. Increased government focus on employment generation and skill development are all positive developments. The growth trajectory of the economy looks robust supported by rising government investment in infrastructure and recovery in the real estate cycle. HSBC Mutual Fund continues to believe in the India growth story.

We have seen many new investors in the mutual fund space which is a heartening trend. We welcome every new investor and thank those who have stayed invested with us over the years. We would like to remind all that it is essential to maintain a disciplined, long-term approach to investing. Continue your SIPs, trust in the power of compounding, avoid the pitfalls of market timing, and keep your expectations realistic. We at HSBC Mutual Fund believe in fundamentals of investing and always there to support you through your investment journey.

Stay grounded in the upbeat markets. Happy investing!

Source: BSE, NSE. Data as on July 31, 2024.

Note: Views provided above are based on information in public domain and subject to change. Investors are requested to consult their financial advisor for any investment decisions.

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