Indian Stock Market is trending up.
Leading indicators like the Nifty 50, BSE Sensex, and Bank Nifty, which are rising by up to 2.90%, have shown a notable rise in the Indian stock market over the last seven days. This growing pattern fits current discussions on a probable US Fed rate cut after the Jackson Hole conference speech by Jerome Powell. Professionals think this positive mindset will allow Monday’s Indian stock market to perform as expected.
For investors looking at stocks and mutual funds, the rising stock market might make selecting the best options challenging. This is guidance on how, considering the situation of the market, investors should change their mutual fund strategies.
Investment Tweaks for Mutual Funds
Professionals advise medium-to-long-term investors to stick to their present plans even with the growth of the market. Those with a one-year investing horizon, however, might gain from certain changes to maximise profits.
Investment Strategies
- Liquid Funds: Ideal for investors with a time horizon of up to 3 months.
- Ultra Short-Duration Funds: Suitable for those planning to invest for 3-6 months.
- Short-Duration Funds: Recommended for investors with a 6- to 12-month outlook.
- Arbitrage Funds: Recommended for investors in higher income tax brackets with a 9–12 month perspective.
Optima Money Managers’ MD and CEO, Pankaj Mathpal, stresses that, with the correct funds, short-term investors might get extra profits of up to 1.5%. In a rising stock market, he counsels, “Liquid Funds, Ultra Short Duration Funds, and Short Duration Funds can help maximise returns.”
Arbitrage Funds: A Tax-Efficient Option
Investors in higher income tax brackets could find arbitrage funds to be a smart choice. Tax-wise, Jitendra Solanki, a SEBI-certified tax and investment professional, points out that arbitrage funds might be helpful. Variability in the market might affect their results. Arbitrage funds might provide smaller returns than liquid funds, ultra-short-duration funds, or short-duration funds, he believes, if the market swings constantly in one direction.
Recommended Mutual Funds
Liquid Funds:
- Kotak Liquid Fund
Ultra-Short Duration Funds:
- ICICI Prudential Ultra Short-Term Fund
Short-Duration Funds:
- Aditya Birla Sun Life Short-Term Fund
Arbitrage Funds:
- Mirae Asset Arbitrage Fund
By considering these strategies and options, investors can better navigate the current bullish market and potentially enhance their mutual fund investments.
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