Why Market Corrections May Be the Best Time to Invest, Not Exit

Markets have spent much of the past year moving sideways. Global conflicts, tariff uncertainties and geopolitical tensions have kept investors on edge, while many first-time participants who entered during the post-pandemic rally are questioning whether equities remain the right place to build wealth.

For many, a prolonged phase of muted returns feels uncomfortable. But according to Chintan Haria, Principal – Investment Strategy at ICICI Prudential AMC, these are often the very phases that lay the foundation for future wealth creation.

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Speaking to Vivek Law on Simple Hai!, Haria argued that investors should view market corrections not as reasons to abandon equities, but as opportunities to strengthen their portfolios. While recent market performance may have tested patience, he believes India's long-term growth story remains firmly intact.

Don't Mistake Consolidation for Weakness

Indian equities delivered extraordinary returns between 2020 and 2024, fuelled by strong corporate earnings, robust domestic participation and improving economic fundamentals. After such a sharp rally, a period of consolidation was almost inevitable.

According to Haria, investors should not confuse a consolidation phase with a deterioration in market fundamentals. Instead, corrections often help bring valuations back to more reasonable levels.

He points out that large-cap companies, particularly in sectors such as banking, financial services, information technology and energy, have become far more attractive than they were at the market's peak. For long-term investors, such phases often provide better entry opportunities than periods of market euphoria.

Haria also cautions against comparing India's short-term performance with markets such as the United States, Taiwan or South Korea. Every economy goes through different business cycles, and leadership among global markets changes over time. Judging investments based on a few months of performance can distract investors from the bigger picture.

SIPs Continue to Anchor Indian Markets

One of the biggest concerns during the recent slowdown has been the increase in SIP stoppages. However, Haria does not believe this signals a structural shift in investor behaviour.

He argues that India's rising financial awareness and growing household savings continue to support long-term investing through mutual funds. More importantly, SIPs have evolved beyond being just a convenient investment method, they have become one of the key stabilising forces in Indian equity markets.

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Regular monthly inflows from retail investors have helped cushion the impact of foreign institutional investor (FII) selling during periods of volatility. This steady domestic participation has made Indian markets more resilient than in previous decades.

His advice to investors is straightforward: if markets are correcting, that is precisely when SIP discipline becomes even more valuable. Stopping investments during periods of uncertainty may mean missing the opportunity to accumulate units at lower prices.

Active and Passive Investing Can Coexist

As passive investing gains popularity, many investors wonder whether they shoruld abandon actively managed funds altogether.

Haria believes this is the wrong way to look at the debate.

Active and passive strategies serve different purposes and can complement each other within the same portfolio. Active funds allow experienced fund managers to identify companies and sectors they believe can outperform the broader market, while passive funds offer low-cost exposure to indices or specific investment themes.

He suggests that investors should not focus solely on expense ratios when choosing passive products. Selecting the right benchmark, understanding the composition of the index and evaluating tracking efficiency are equally important.

A low-cost investment that tracks an unsuitable index may ultimately be less rewarding than paying a slightly higher fee for a product that better aligns with an investor's financial objectives.

Asset Allocation Matters More Than Market Timing

Another recurring theme during the conversation was the importance of asset allocation.

Many investors become overly optimistic after markets rally and overly pessimistic during corrections. This emotional cycle often leads to buying high and selling low.

Haria believes asset allocation strategies such as balanced advantage funds and multi-asset funds can help address this behavioural challenge. These products automatically adjust equity exposure based on market conditions, reducing equity allocations when valuations become expensive and increasing them when markets correct.

Such an approach helps remove emotions from investment decisions and encourages disciplined wealth creation over the long term.

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Simplicity Is Often the Best Starting Point

With hundreds of mutual fund schemes available today, first-time investors often struggle to decide where to begin.

Rather than trying to identify the next top-performing fund, Haria recommends starting with a simple SIP in diversified categories such as flexi-cap funds, large-cap index funds or balanced advantage funds.

As investors gain confidence and experience market cycles firsthand, they can gradually diversify into mid-cap, small-cap or thematic funds.

He warns against one of the most common investing mistakes, choosing funds solely because they delivered the highest returns over the previous year.

Using a memorable analogy, Haria says investing based only on past returns is like trying to drive a car by looking only at the rear-view mirror. Past performance provides useful context but should never be the sole basis for future investment decisions.

Domestic Investors Are Reshaping Indian Markets

One of the most significant structural changes in recent years has been the rise of domestic investors.

For decades, Indian equity markets were heavily influenced by foreign institutional investors. Today, consistent inflows from domestic mutual funds and retail investors have emerged as an effective counterbalance.

Even when FIIs have reduced their exposure because of global uncertainties or shifting valuations, domestic investors have continued investing through SIPs and mutual funds, helping stabilise market sentiment.

According to Haria, this reflects the increasing maturity of Indian investors and the country's evolving investment culture.

Patience Remains the Greatest Investment Advantage

Towards the end of the discussion, the conversation shifted beyond markets to personal finance.

Drawing from his own experiences, Haria emphasised the importance of living within one's means and resisting lifestyle inflation, especially during the early years of a career. Instead of immediately increasing spending with every salary hike, he encourages young professionals to prioritise investing and allow compounding to work over decades.

Luxury purchases can always come later. The habit of disciplined investing, however, is most powerful when cultivated early.

Ultimately, Haria believes the principles of successful investing have remained remarkably consistent despite changing market conditions.

Invest regularly. Diversify sensibly. Avoid chasing yesterday's winners. Ignore short-term noise.

Above all, stay invested.

Because while markets will continue to fluctuate, patience has historically remained one of the most reliable drivers of long-term wealth creation.

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