Dear Reader,

I have been called a broken record recently. By clients, by colleagues, and possibly by my own team. I take it as a compliment. The record in question is asset allocation, and it has been my answer to some version of the same question this past month. 

“Should I stop my SIP, Should I move to gold, Is this time different?”

I keep answering as the anxiety is genuine, even if the soundest answer remains unchanged.

What the picture actually looks like

Before I get to the questions, let me tell you what I see when I look at the broader picture, because I think it is considerably calmer than what your phone is suggesting.

The foundation remains resilient. India’s economy grew 7.8% between April and June, comfortably ahead of RBI’s own projection, and in rupee terms is roughly 20% larger than it was two years ago. 

Our foreign exchange reserves stand at $734 billion which is enough to cover 11 months of imports, up $100 billion from $634 billion in 2021. This is despite a world that has thrown a lot more at us since then.  

The headwinds are all too real, as well. Crude oil has stayed volatile. Brent hovered around the $100 mark through September, and West Asia remains a worry. Foreign institutional investors have pulled $33 billion out of Indian equities this year, more than any previous year. The RBI raised rates to 5.5% in October, keeping a watchful eye on inflation and changing its stance to “calibrated tightening”.

So the picture is of a sound economy navigating external pressures. The view that everything is about to end has never struck me as particularly useful and this year has done nothing to change that.

The three questions October is raising

Most of the anxiety I am hearing falls into one of three questions. Let me take each in turn.

Should I stop my SIP?

I understand the instinct. For anyone who began investing a few years ago, this year looks especially discouraging. But the habit that matters most is saving itself, and it matters more in years like this one. The same rupee invested today buys more units than it would have at the peak. That is the mechanism working as intended.

What is striking is that many investors seem to understand this intuitively. SIP contributions reached a record ₹32,297 crore in August, even as FIIs were selling. Our research team looked at every two-year stretch in which the Nifty moved sideways. Each one was followed by positive returns over the subsequent five years. The past is not a guarantee, but it is a reasonable guide to how such stretches have tended to end.

Should I move to what has worked?

Gold has had a remarkable two years. Global equities have held up better than domestic ones. The pull toward what has been working is entirely human, and almost always mistimed.

Both gold and global equity have a place in well-constructed portfolios. The question is not whether to own them but how much. A couple of strong years shift the balance. What rose now occupies more room than you planned. Before you chase the recent winner, check whether your portfolio simply needs rebalancing back to its original design. That is what the plan is for.

Can I spend on Diwali when my portfolio is red?

Yes, without a doubt.

The money set aside for this year’s celebrations and the money meant for your goals in 2035 have nothing to do with each other, assuming you kept them apart in the first place. If the next few years of your needs are sitting in stable assets, the market has no say on your festivals. Spend with the joy the season deserves.

Playing the long innings

No one can tell you when this difficult stretch will end. I would be wary of anyone who says they can. What I can tell you is that we are watching growth, inflation, oil prices, and capital flows so that you do not have to watch them every hour.

The batsman who keeps glancing at the scoreboard is usually the one who gets out. The one who watches the bowler, reads the pitch, and knows which balls to leave, that is the one still there at the close of play.

So before you change anything, ask yourself this. If markets stay weak for another year, are the next few years of your life provided for? If the answer is yes, the rest is straightforward. Keep saving. Stay invested. Let time do what it has always done.

Perhaps, being a broken record is not without its merits.

With warm regards,

Atul Shinghal 

CEO and Founder,

Scripbox

P.S. If your answer to that question was anything less than a clear yes, that is exactly the conversation we should have before Diwali. We are here.