How to deal with market volatility

Markets never move in a straight line. Periods of growth are often followed by corrections, and sometimes sharp, sudden fluctuations. This movement — known as market volatility — can be uncomfortable, but it is a natural and unavoidable part of investing.

What Causes Market Volatility?

Several factors can create market swings, including:

• Global events (wars, elections, policy changes)
• Inflation and interest rate movements
• Economic slowdowns or recession fears
• Corporate earnings surprises
• Crude oil and commodity price changes
• Investor sentiment and FII flows

Volatility is often temporary, but your response to it impacts long-term returns.

How to Deal With Market Volatility

1. Stay Calm — Avoid Emotion-Based Decisions

Fear leads to panic selling, which converts temporary losses into permanent ones. Volatility is not new, and markets have always recovered from past downturns. A calm mindset helps you avoid:

• Selling at the wrong time
• Switching funds unnecessarily
• Making decisions based on news or market noise

2. Continue Your SIPs Without Interruption

Volatility actually benefits SIP investors through rupee-cost averaging. When markets fall, you buy more units at lower NAVs, reducing your overall investment cost. Stopping SIPs during volatility means missing out on some of the best buying opportunities.

3. Focus on Asset Allocation, Not Daily Returns

Asset allocation is your biggest shield during volatile periods. A balanced mix of:

• Equity (for growth)
• Debt (for stability)
• Hybrid funds (for balanced exposure)

…helps protect your portfolio and reduces the impact of market fluctuations. Instead of reacting to losses, check if your allocation still matches your goals and risk profile.

4. Use Dips as a Long-Term Opportunity

Volatility often brings high-quality funds at discounted values. Investors may consider:

• Increasing SIP amounts
• Making a small lumpsum investment
• Adding to index or large-cap funds during dips

Long-term investors benefit the most when they buy during corrections.

5. Diversify Your Portfolio

A well-diversified portfolio reduces risk and smoothens volatility. Your investments should include:

• Large cap funds
• Flexi cap funds
• Mid & small cap funds (limited exposure)
• Debt funds
• Gold or other diversifiers

This ensures that when one segment underperforms, another supports your overall returns.

6. Avoid Checking Your Portfolio Too Frequently

Daily fluctuations can trigger anxiety and emotional decisions. A better approach is to:

• Review your investments quarterly
• Stick to financial goals
• Avoid reacting to short-term market movements

Your long-term goals don’t change daily — and neither should your portfolio.

7. Maintain an Emergency Fund

Volatility becomes stressful when investors need money urgently. To avoid selling investments during a downturn, keep:

• 3–6 months of expenses in liquid or ultra-short debt funds

This gives you confidence to stay invested long term.

8. Seek Professional Guidance

Platforms like AssetPlus, ZFunds, and other advisor-led apps can support you with:

• Portfolio reviews
• Risk assessment
• Goal-based planning
• Market insights and recommendations

A guided approach ensures you don’t let emotions dictate investment decisions.

What You Should NOT Do During Volatility

❌ Stopping SIPs
❌ Panic selling
❌ Timing the market
❌ Switching funds frequently
❌ Chasing shortcuts or tips

These actions usually harm long-term wealth creation.