Trading volumes in exchange-traded funds (ETFs) on the National Stock Exchange (NSE) typically spike when the Nifty drops more than 1 per cent, according to media reports. This indicates that savvy investors use such declines as buying opportunities.

ETFs are well-suited for dip-buying as they offer intraday liquidity. “Unlike mutual funds, which are priced only at day-end, ETFs trade in real time, allowing investors to act immediately during sharp intraday declines,” says Arun Patel, founder and partner, Arunasset Investment Services.