Nifty Touching 200 EMA, Best Time for a Lumpsum Mutual Fund Portfolio?

Indian market index Nifty 50 is so close to 200 EMA. According to Investopedia, long term Investors specifically uses 50-day and 200-day EMA. The Exponential Moving Average (EMA) is a technical analysis tool used in the stock market to identify trends by placing greater weight on recent price data compared to older data. Nifty 50 already crossed 50 ema on October 17. As of November 4, Nifty closed at 23,990, which is almost 8.47% below then its all time high 26,211 in September 26.

This is a right time when Long-term investors can prepare themselves to do some amount of Lumpsum investment to reduce the average purchase NAV in their mutual fund portfolio. But the question is should investors wait for nifty 50 to close below 200ema to do Lumpsum?

There are different types of investors who follows their own investing strategy. The market is unpredictable and no one knows if nifty will go below 200 ema in this falling market. Investors can start adding Lumpsum amount as percentage wise until nifty 50 trading between 50 and 200 ema. This indicates that most of the stocks are currently far below price from the price when nifty 50 was at all time high.

Suppose an investor want to do a Lumpsum investment of ₹1 Lakh, instead of waiting for nifty to hit 200 ema, he can invest 20% or ₹20,000. Then then if nifty hit 200ema, he can put remaining 80% of the investment. In this way, the investor got the opportunity to average his portfolio even if nifty reverse before hitting 200ema.

If you are doing sip, then continue doing it and adding extra lumpsum investment during such market correction can really make big impact in long-term investing. To receive latest mutual fund news in your inbox, do subscribe to our newsletter.