Stock markets witnessed sharp volatility last week as rising geopolitical tensions in West Asia, a spike in crude oil prices, sustained foreign investor selling and weakness in the rupee weighed heavily on investor sentiment.
The benchmark Nifty50 ended over 2% lower for the week, while the Sensex also posted steep losses. Broader markets saw even sharper declines, with smallcap and midcap indices falling significantly amid widespread risk aversion.
The same was evident with this week’s start as Sensex lost nearly 1,000 points in early trade but recovered to trade in green a few hours before the closing bell.
According to Santosh Meena, the Indian equity market remained under pressure due to multiple global and domestic concerns, including rising crude oil prices, rupee depreciation and continued foreign institutional investor (FII) selling.
“It was a challenging week for the Indian equity markets, with both the Nifty and Sensex declining more than 2% amid rising geopolitical tensions, a sharp surge in crude oil prices, sustained FII selling, and significant weakness in the rupee,” Meena said.
He added that geopolitical developments, crude oil prices, rupee movement and FII activity will remain crucial indicators for market direction in the coming sessions.
Despite the correction, some market experts believe periods of volatility may offer opportunities for long-term investors, especially those looking at systematic investments through index funds.
Kranthi Bathini said for investors looking at long-term wealth creation.
“Index funds are replicas of indices which are cost effective,” Bathini said. “Investors with a long-term horizon can buy index funds and take advantage of movements in the headline indices.”
He added that long-term investment strategy remains important while investing in index funds.
Nifty 50 index funds are passive mutual funds that mirror the performance of the Nifty 50 index, which tracks India’s 50 largest listed companies across sectors.
These funds are generally considered suitable for investors looking for long-term exposure to large-cap companies without actively picking stocks. Since they are passively managed, they also tend to have lower expense ratios compared to many actively managed equity funds.
Market experts say such funds may help investors participate in long-term market growth while reducing the pressure of timing market entries during volatile phases.
Dr. Ravi Singh said the broader market continues to remain under pressure due to global uncertainties and cautious investor sentiment.
“Crude oil prices surged back to $109 per barrel, raising concerns over India’s import bill and inflationary pressures,” Singh said, adding that FIIs remained aggressive sellers during the week.
Experts often advise retail investors to continue investing through SIPs during volatile periods instead of making lump sum bets based on short-term market movements.
Nifty 50 index funds are also seen as relatively stable compared to broader market segments because they invest in established large-cap companies. The index is rebalanced periodically, allowing the portfolio to automatically adjust to changing market trends.
Among the schemes in this category, the Nippon India Mutual Fund Nifty 50 index fund has one of the lower expense ratios at 0.07%, according to the shared market data. Other funds in the segment include offerings from Axis Mutual Fund and DSP Mutual Fund.
Even on performance benchmarks, the Nippon India Index Fund – Nifty Plan has delivered a 5-year rolling CAGR of around 18.38%, among the highest in the category.
However, experts caution that index funds are still market-linked products and investors should maintain a long-term investment horizon instead of expecting quick gains from short-term rebounds.
For now, analysts believe market sentiment is likely to remain sensitive to global developments, oil prices, rupee movement and central bank commentary, keeping volatility elevated in the near term.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)