CEO Speak July 2024

Why SIPs matter when market soar….

The markets stabilised and then rose sharply in June as the election results came out and the elected government took office. The Indian equity markets have soared to new heights, with the Sensex crossing the 80,000 mark. The buoyant equity markets enabled the Indian Mutual Fund Industry AUM to cross Rs 59 trillion. This remarkable resilience and growth, especially following the general elections, have left many investors both excited and apprehensive. While the bullish market sentiment is a positive indicator, it's essential for investors to remain focused on their investment objectives.

One of the most effective ways to do this is by continuing with Systematic Investment Plans (SIPs). This bullish sentiment has also led to a rather surprising trend: some investors are stopping their Systematic Investment Plans (SIPs) in an attempt to "lock in" gains or avoid potential future declines. During such period, it is advised to investors not get swayed by the short term movements of the markets and stay true to their long-term financial goals.

5 Reasons Why you should Continue SIPs Despite Market Highs?

1. Market Cycles are Inevitable: The markets operate in cycles of highs and lows. While the current high is a testament to economic strength and investor confidence, it is important to remember that corrections are a natural part of market dynamics. Continuing with SIPs ensures that you are invested across different market phases, reducing the risk associated with timing the market.

2. Remain Goal focused: Financial goals such as retirement, children's education, or buying a home are typically long-term. Short-term market movements should not dictate your investment decisions. SIPs align well with these long-term objectives, allowing you to accumulate wealth systematically over time.

3. Avoid Emotional Investing: Surging markets can lead to emotional investing, where decisions are driven by greed during highs and fear during lows. SIPs on the other hand are automated investments, thereby removing the emotional quotient from investment decisions. So does not make sense to stop an ongoing SIP.

4. Interrupting the power of compounding: Compounding works best with regular, uninterrupted investments. Stopping SIPs disrupts this compounding effect, reducing the potential for significant long-term wealth accumulation.

5. Harnessing the market growth and potential: Equity markets have historically demonstrated resilience and long-term growth despite periodic volatility. By stopping SIPs during market highs, investors risk missing out on potential future gains. Staying invested allows you to participate in the ongoing growth of the market.

The allure of stopping SIPs during market highs can be strong, but it’s essential to consider the long-term implications. The disciplined approach of SIPs is designed to help you navigate market volatility and achieve your financial goals. By continuing your SIPs, you harness the power of rupee cost averaging, maintain the compounding effect, and stay aligned with your long-term objectives. Remember, successful investing is about time in the market, not timing the market.

Stay invested, stay disciplined, and let your SIPs work for you over time.

Source: BSE Sensex, AMFI - AUM data as on May 2024

Disclaimer: This document has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and should not be construed as i) an offer or recommendation to buy or sell securities, commodities, currencies or other investments referred to herein; or ii) an offer to sell or a solicitation or an offer for purchase of any of the funds of HSBC Mutual Fund; or iii) an investment research or investment advice. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall HSBC Mutual Fund/HSBC Asset management (India) Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein. This document is intended only for those who access it from within India and approved for distribution in Indian jurisdiction only. Distribution of this document to anyone (including investors, prospective investors or distributors) who are located outside India or foreign nationals residing in India, is strictly prohibited. Neither this document nor the units of HSBC Mutual Fund have been registered under Securities law/Regulations in any foreign jurisdiction. The distribution of this document in certain jurisdictions may be unlawful or restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions. If any person chooses to access this document from a jurisdiction other than India, then such person do so at his/her own risk and HSBC and its group companies will not be liable for any breach of local law or regulation that such person commits as a result of doing so.

© Copyright. HSBC Asset Management (India) Private Limited 2024, ALL RIGHTS RESERVED.

All third party trademarks (including logos and icons) remain the property of their respective owners. Use of it does not imply any affiliation with or endorsement by them.

HSBC Mutual Fund, 9-11th Floor, NESCO - IT Park Bldg. 3, Nesco Complex, Western Express Highway, Goregaon East, Mumbai 400063. Maharashtra.

GST - 27AABCH0007N1ZS | Website: www.assetmanagement.hsbc.co/in

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.