"The market is at an all-time high. Should I wait for a correction?"
We get this question almost daily in our WhatsApp community. Sometimes from someone who's been waiting six months. Sometimes from someone who waited three years and watched the Sensex go from 60,000 to 85,000.
The fear is real. Nobody wants to invest today and see their portfolio down 15% next month.
But here's what we've learned at Belong after helping many NRIs navigate this exact worry: the fear of all-time highs has cost more people more money than actual market crashes.
In 2024 alone, the Nifty 50 hit 59 new all-time highs. That's more than any previous year in history. (Business Standard)
If you had waited for a "better entry point" after each one, you would have missed the entire rally.
This guide will help you understand what all-time highs actually mean, when to invest despite them, when genuine caution makes sense, and how to build a portfolio that doesn't depend on market timing.
Why All-Time Highs Feel So Scary
Let's acknowledge the emotion first.
When you see headlines screaming "Sensex crosses 85,000!" or "Nifty at record high!", your brain immediately thinks: "This can't go on. A crash is coming."
This is called recency bias. We remember recent crashes vividly. The 2020 Covid crash. The 2008 financial crisis. We don't as easily remember that after each crash, the market eventually went higher than before.
There's also loss aversion at play. Research shows that the pain of losing Rs 1 lakh feels about twice as intense as the joy of gaining Rs 1 lakh. So when markets are high, the potential downside looms larger in our minds than the potential upside.
And finally, there's the anchoring problem. If you've been tracking the Nifty since it was at 18,000, then 26,000 feels expensive. But for someone who started watching at 8,000, even 18,000 seemed expensive.
The question isn't whether markets are high compared to the past. They almost always will be. The question is whether they're high compared to future earnings potential.
👉 Tip: Your emotions are not investment indicators. The market doesn't know or care about your entry point.
What the Data Actually Shows About All-Time Highs
Here's something that surprised us when we first analyzed it:
Markets spend a significant portion of their time at or near all-time highs. This is because, over long periods, equity markets trend upward. An index that never hit new highs would be a failing index.
Consider this: Between 1999 and 2024, the Nifty 50 has grown from around 1,000 to over 26,000. That's a 26x increase. (NSE India)
Along the way, it hit countless all-time highs. Each one felt scary at the time. Each one, in hindsight, was a buying opportunity for long-term investors.
Research from Arthgyaan analyzed what happens after Nifty hits an all-time high. The findings: average returns over the next 3-6 months remained positive more often than not. (Arthgyaan)
This doesn't mean markets never fall after hitting highs. They do. But it means that waiting for a pullback is not a statistically superior strategy.
The Real Cost of Waiting for a Correction
Let's do some math that might change how you think about this.
Imagine you had Rs 10 lakh in January 2020. The Nifty was around 12,000. You thought, "Markets are at all-time highs. I'll wait for a correction."
Then Covid happened. The market crashed 35% in March 2020. The Nifty fell to around 7,500. Perfect buying opportunity, right?
But most people didn't buy. They were terrified. Headlines were apocalyptic. Many thought the market would fall further.
By December 2020, the Nifty was back above 13,000. By September 2024, it crossed 26,000.
The person who invested at the "scary" January 2020 high and stayed invested more than doubled their money. The person who waited for the perfect moment often never found it.
This pattern repeats across decades. The "crash" everyone waits for either doesn't come, or when it does, fear prevents action.
👉 Tip: Time in the market beats timing the market. This isn't just a saying. It's backed by decades of data across global markets.
When Valuations Actually Matter
Now, let's add nuance. All-time highs alone don't tell you much. Valuations do.
The Nifty 50 PE ratio measures how expensive the market is relative to earnings. Historically:
- PE below 14: Market is likely undervalued
- PE between 14-22: Market is fairly valued
- PE above 22: Market is getting expensive
- PE above 25: Market is overvalued
As of late 2024 and into 2025, the Nifty PE has hovered around 21-23. (Craytheon)
This means the market is on the higher end of fair value. Not bubble territory. Not screaming cheap either.
But here's what most people miss: PE ratios have been trending higher over the decades. The average PE in the 2000s was lower than in the 2010s, which was lower than in the 2020s. This happens as more domestic money flows into markets and India's growth story strengthens.
So comparing today's PE to 2008's PE is like comparing today's real estate prices to 1998's. Context matters.
How to Invest When You're Nervous About Highs
Here's our practical framework for NRIs who want to invest but feel anxious about market levels:
Option 1: Continue Your SIP (Best for Most People)
If you're already running a SIP, continue it. Don't stop.
This sounds simple, but data shows it's exactly what most people fail to do.
Between October 2024 and March 2025, when markets corrected 15-20% from their September highs, the SIP stoppage ratio spiked to 128%. (Outlook Money)
That means more SIPs were stopped than started. Investors panicked at exactly the wrong time.
The whole point of SIP investing is rupee cost averaging. When markets fall, your fixed investment buys more units. When markets rise, you buy fewer. Over time, this averages out your cost.
If you stop SIPs when markets fall, you defeat the entire purpose. You lock in your losses and miss the recovery.
👉 Tip: Set up SIP auto-debit and forget about it. Don't check your portfolio daily. Review quarterly at most.
Option 2: Stagger Your Lumpsum (For Large Amounts)
Have a lumpsum to invest? Say, gratuity from a job change, or money from selling property?
The research actually shows that lumpsum investing beats SIP over the long term because markets trend upward. (Arthgyaan)
But if you can't stomach the volatility, here's a middle path:
Use a Systematic Transfer Plan (STP). Park your money in a liquid fund or overnight fund. Then set up automatic transfers to your equity fund over 6-12 months.
This doesn't guarantee better returns. But it does reduce regret risk. If markets fall right after you invest, you won't have put everything in at the top.
Option 3: Adjust Your Asset Allocation (For the Cautious)
If markets genuinely feel stretched to you, don't abandon equities. Adjust your allocation.
Instead of 70% equity and 30% debt, perhaps shift to 60% equity and 40% debt temporarily.
This gives you some protection if markets correct. And the debt portion provides dry powder to deploy if a genuine crash happens.
Use hybrid funds or balanced advantage funds that do this rebalancing automatically. They increase equity when markets fall and reduce it when markets rise.
Which Fund Categories Make Sense at Market Highs?
Not all mutual funds carry the same risk at high valuations. Here's how to think about categories:
Large-Cap and Index Funds: Relatively Safer
Large-cap funds invest in the top 100 companies by market cap. These are typically more stable, less volatile, and recover faster from corrections.
If you're nervous about valuations, overweight your portfolio toward large-caps and Nifty 50 index funds.
The Nifty 50 PE at 22 is less concerning than small-cap valuations, which have been significantly higher.
Mid-Cap and Small-Cap: Higher Risk, Higher Reward
Mid-caps and small-caps have run up significantly in 2023-2024. Their valuations are stretched compared to historical averages.
If you're investing fresh money, consider reducing allocation to small-cap funds temporarily. Or use SIP to average in slowly rather than lumpsum.
Debt Funds: Your Stability Anchor
Don't ignore debt funds when equity markets are high.
Short-duration funds, corporate bond funds, and target maturity funds provide stability. If equity falls 20%, your debt portion might be flat or slightly positive, cushioning your overall portfolio.
International Funds: Diversification Benefit
When Indian markets feel expensive, global markets might offer better value. Or vice versa.
International funds like DSP Global Equity Fund give you exposure to US and global markets. This also provides currency diversification, which matters for NRIs earning in AED or USD.
👉 Tip: Use Belong's FD Comparison Tool to compare fixed deposit rates if you want to park some money safely while deciding on equity investments.
The Psychology of Market Timing (And Why It Fails)
Here's a confession: we've tried to time markets. Early in our careers, we thought we could spot tops and bottoms.
We couldn't. Neither can most professional fund managers.
A famous study by Dalbar Inc shows that the average investor significantly underperforms the market. Not because they pick bad funds. But because they buy at highs (when excited) and sell at lows (when scared).
The behavioral gap, the difference between fund returns and investor returns, can be 3-5% annually. Over 20 years, this compounds into massive wealth destruction.
What works instead:
Asset allocation: Decide how much to put in equity, debt, and gold based on your goals and timeline. Stick to it.
Rebalancing: Once a year, if equity has grown to 75% of your portfolio against a 60% target, trim it back. If it's fallen to 50%, add more.
Rules-based investing: "I will invest Rs 25,000 on the 5th of every month regardless of where the market is." Write it down. Follow it.
What NRIs Specifically Should Consider
As an NRI in the UAE or elsewhere, you have additional factors to weigh:
Currency Movement
The rupee has depreciated about 3-4% annually against the dollar over the past decade. (RBI)
This means even if Indian equity returns 12% in rupee terms, your dollar return might be 8-9%.
When deciding whether Indian markets are "expensive," factor in that you're also making a currency bet.
GIFT City investments offer USD-denominated options that remove this uncertainty for a portion of your portfolio.
Tax Implications
NRIs face TDS on mutual fund redemptions. Equity funds attract 20% STCG (under 1 year) and 12.5% LTCG (over 1 year, above Rs 1.25 lakh exemption).
If you're timing the market and frequently switching funds, you're triggering taxes each time. This eats into returns.
Long-term holding is not just emotionally easier. It's tax-efficient.
GIFT City mutual funds offer zero capital gains tax for NRIs, making them particularly attractive for long-term wealth building.
Repatriation Planning
If you're planning to return to India in 3-5 years, your investment horizon is shorter. You can't afford a 40% crash right before you need the money.
In this case, being more conservative makes sense. Tilt toward debt, FCNR deposits, and GIFT City FDs.
👉 Tip: Use our Residential Status Calculator to understand how your tax status might change when you return.
A Framework for Different Scenarios
Let's get practical. Here's what to do based on your specific situation:
Scenario 1: You Have a Monthly SIP Running
Action: Continue. Don't stop. Don't even look at it monthly.
If you feel strongly that markets will fall, you can slightly reduce your SIP amount. But don't stop entirely. Restarting a stopped SIP requires emotional energy that most people don't have when markets are crashing.
Scenario 2: You Have a Large Lumpsum to Invest
Action: Deploy through STP over 6-12 months.
Split your amount into 6-12 parts. Park in a liquid fund. Transfer to equity monthly.
This won't maximize returns if markets go up. But it will minimize regret if markets fall.
Scenario 3: You're Starting Fresh
Action: Start a SIP today. Don't wait for the "right time."
Pick a flexi-cap or multi-cap fund as your first fund. Set up auto-debit. Increase SIP amount as your income grows.
The best time to start was yesterday. The second best time is today.
Scenario 4: You're Sitting on Gains and Worried
Action: Rebalance if your allocation has drifted significantly.
If you started with 60% equity and it's now 80% due to gains, take some profits. Move to debt or gold. This locks in gains and reduces risk.
Don't sell everything. Just restore your original allocation.
Scenario 5: You're Convinced a Crash is Coming
Action: Reduce equity exposure, but stay invested.
Shift from 70% equity to 50%. Move the rest to debt or liquid funds.
If you're wrong and markets go up, you still participate partially. If you're right and markets crash, you have cash to deploy.
Never go to 0% equity based on a prediction. Predictions are usually wrong.
The Difference Between a Correction and a Crash
Not all market falls are the same.
Correction (5-10% fall): Normal. Happens multiple times a year. Not a reason to panic or change strategy.
Pullback (10-20% fall): Less common. Might happen once every 1-2 years. Good opportunity to add more via SIP or lumpsum.
Crash (20%+ fall): Rare. Maybe once every 5-10 years. The best buying opportunity if you have dry powder and emotional fortitude.
Between September 2024 and February 2025, the Nifty corrected about 15% from its peak. (Outlook Money)
This was a pullback, not a crash. And yet, SIP stoppages spiked to record levels. Investors panicked.
The investors who continued SIPs or added money during this period will likely look back at it as a great entry point.
👉 Tip: Write down your investment plan and rules when you're calm. Then follow them when you're panicked.
How GIFT City Changes the Equation for NRIs
Here's an option many NRIs don't know about.
GIFT City (Gujarat International Finance Tec-City) is India's international financial services center. It offers investment products specifically designed for global investors.
For NRIs worried about market timing, GIFT City offers:
Zero capital gains tax: Unlike regular Indian mutual funds, GIFT City funds have no LTCG or STCG for NRIs. (IFSCA)
USD-denominated options: Invest in dollars, receive returns in dollars. No currency conversion timing risk.
Same underlying markets: Many GIFT City funds invest in Indian equities, so you get India exposure without the tax drag.
Funds like Tata India Dynamic Equity Fund offer dynamic asset allocation, automatically reducing equity when valuations are high.
Explore options using Belong's GIFT City Mutual Funds Explorer.
The Final Word: Markets Will Always Feel High
Here's the perspective shift that helped us:
The Sensex was at 1,000 in 1990. Someone thought it was expensive.
It was at 5,000 in 2000. Someone waited for it to fall.
It was at 20,000 in 2008 (before crashing to 8,000, then recovering to 60,000).
It crossed 85,000 in 2024.
At every single point, someone was paralyzed by fear of heights.
The long-term trend is up. Not because of hope or optimism. But because of economic growth, corporate earnings, and the compounding of human productivity.
Your job as an investor is not to predict the next 6 months. It's to capture the next 20 years.
Start investing. Stay invested. Rebalance periodically. Ignore the headlines.
Take Action Today
Markets will always give you reasons to wait. The discipline to invest despite those reasons is what separates successful long-term investors from everyone else.
If you're still unsure, join our WhatsApp community where NRIs discuss exactly these questions. Get perspectives from others who've navigated the same fears.
Download the Belong app to explore GIFT City mutual funds with zero capital gains tax, compare NRI FD rates, and use our Compliance Compass to ensure your investments are fully compliant.
The best time to invest was yesterday. The second best time is now.
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