Share market holidays have a profound impact on mutual fund investments because they create significant market fluctuations. Mutual funds invest in a diversified portfolio of stocks, and any movement in the market can affect fund performance. Moreover, certain events can trigger heavy buying or selling of stocks, resulting in significant market fluctuations that can be tough to manage.
For instance, during festivals such as Diwali and Christmas, trading activity decreases as market participants take a break from trading. On the other hand, trading activity spikes during election results or budget announcements, leading to extreme market volatility. Therefore, it is essential to track the holiday calendar to align your mutual fund investments accordingly.
Planning Your Mutual Fund Investment Strategy around the Share Market Holidays
The impact of market holidays on mutual fund investments depends on various factors such as the fund’s investment strategy, sector allocation, and the specific holiday. For instance, a mutual fund that invests primarily in the automobile sector may be affected more by holidays falling during the festive season than a fund that focuses on healthcare.
Holiday calendars differ for various countries, and tracking specific dates that impact your mutual fund investments is crucial. In India, for instance, the Diwali trading session named “Mahurat Trading” is considered an auspicious day to start making investments. Suppose you are planning to invest in mutual funds around this period. In that case, it is essential to avoid making large sum investments since the market could fluctuate heavily in the days following the holiday.
Creating an investment plan that aligns with the share market holiday dates
Creating an investment plan that aligns with share market holiday dates can help investors gain an edge over the market. This is done by taking advantage of opportunities during trading lulls. Here are some tips to help you plan your mutual fund investment strategy around the share market holidays:
- Do your research – Understanding how specific holidays impact your mutual fund investments can help you make better investment decisions. Analyze historical data and market reports to get an idea of how markets are likely to move based on the holiday calendar.
- Diversify your investments – A diverse mutual fund portfolio can minimize risks associated with market fluctuations. While investing around the holidays, make sure to spread your investments across different asset classes and sectors to better weather volatility.
- Stay updated – Keep track of the latest market news and regulatory updates to stay on top of the market during volatile periods. This will help you plan your investments accordingly and make informed decisions.