Navigating the Storm: How Market Volatility Shapes Mutual Fund Performance in India

Shashikumar Bhambhani, Dhandhukiya Ridham Ketankumar, Gajendra Meena

Abstract: The global financial markets exhibit inherent volatility due to various factors, including economic cycles, geopolitical developments, regulatory shifts, and investor sentiment. In India, mutual funds have gained prominence as a preferred investment option, making it essential to understand the impact of market fluctuations on their performance. This study examines the relationship between market volatility and mutual fund returns in India by analysing historical data, fund performance, and broader market conditions. The research highlights how different mutual fund categories, such as equity, debt, and hybrid funds, respond to market volatility. Equity - oriented funds tend to be more sensitive to market fluctuations, whereas debt and hybrid funds generally experience lower variations in returns. Additionally, investor behaviour and advisory sources play a crucial role in shaping market movements. While institutional investors and professional fund managers adopt data - driven strategies to navigate volatility, retail investors often react impulsively to market news and speculative advice, amplifying fluctuations. By providing insights into risk management strategies and investment decision - making, this study serves as a valuable resource for investors, financial advisors, and policymakers. A deeper understanding of market volatility can aid in the development of informed investment approaches, enhance portfolio stability, and contribute to a more resilient mutual fund industry in India.

Keywords: market volatility, mutual fund performance, Indian financial markets, investor behaviour, risk management