Sensex, Nifty at record highs again! From strategies to preferred sectors, experts advise on how to navigate the market now

Indian benchmark indices continued their record run for the second straight session on Thursday with the Sensex rising 406 points to a fresh high of 80,392.64, while the broader Nifty gained 114.5 points to a peak of 24,401.

The Sensex had crossed the 80,000-point mark for the first time on July 3. A week ago, on June 27, the Nifty too had achieved a new milestone by crossing the 24,000-point mark for the first time.

“Sensex crossing the 80,000-point mark is a great achievement for the Indian equity market. 16 years ago, it was 8,800 points on the day Lehman, a leading bank in the US markets, collapsed. Nine times in 16 years. However, four years ago, during the COVID pandemic, it was 26,000 points, which seems unrealistic but is true. This gives us confidence that equity markets have performed well in the long run, we need patience and confidence while investing and even after. Based on the current domestic macro data, our advice is to continue investing systematically in equities with a long-term view,” said Shrikant Chouhan, Head Equity Research, Kotak Securities.

The recent rally was boosted by supportive global data and an advance in the Indian monsoon. In the US, bond yields eased, strengthening the Federal Reserve’s case for potential rate cuts this year on weaker economic data. Lower bond yields and expectations of US rate cuts are encouraging foreign portfolio investors (FPIs) to remain active buyers in the market.

Despite these record highs and the expensive valuations of the Indian market, experts predict that the current bull run will continue. In the four sessions of July alone, the indices gained almost 1.5 percent after rising more than 6.5 percent in June.

“We remain positive on Indian markets over the long term, given the strength and persistence of earnings growth and continued improvement in capital efficiency. Aggregate markets may not look attractive, but business earnings deliveries will be closely watched. Those that deliver the expected strong growth should continue to create value,” said Sumit Jain, Associate CIO, ASK Investment Managers.

With valuations so high, bullish momentum continuing, and no immediate reason for a correction, market participants are faced with both excitement and caution. Against this backdrop, industry experts share their perspectives on how investors should navigate the current market landscape. From sector preferences to cautious portfolio adjustments, their insights provide investors with valuable guidance.

Most experts predict that Nifty’s end target for 2024 will be in the range of 24,500-26,000.

As the market continues to rally, investors are advised to exercise conscious caution. Diversifying portfolios, focusing on strong fundamentals, and staying in tune with macroeconomic trends are key strategies that experts recommend to seize opportunities and navigate potential volatility in the coming months.

Ravi Singh – Senior Vice President, Retail Research, Religare Broking Ltd.

The strategy is simple; one has to stick to fundamentally strong stocks and exit from fundamentally weak companies at current market levels. One has to collect quality names on every dip because by positioning we are in a bull market. We believe Nifty can touch 24,900 by the end of the year.

Sonam Srivastava, Founder and Fund Manager at Wright Research

We expect Nifty to trade higher and touch 26k by the end of the year. A sound market strategy for H2FY24 could involve a balanced portfolio approach. This could mean allocating investment to growth-oriented sectors like banking and consumer discretionary, along with value stocks that potentially feature in the consumer discretionary sector. Also, including defensive sectors known for stability like consumer discretionary could help mitigate potential market volatility. Success in H2FY24 hinges on actively monitoring economic data, central bank policies, and geopolitical developments as these factors significantly impact the market direction.

Apurva Sheth, Head of Market Outlook and Research, SAMCO Securities

We would prefer to go for a balanced approach where the portfolio is more biased towards large caps that are trading at better valuations compared to mid/small caps. One should also prefer significant exposure to precious metals like gold and silver as they tend to perform well when the US Federal Reserve cuts interest rates. This also acts as a hedge in case of economic turmoil. Nifty could touch 24,500 and 25,400 levels in H2 2024.

Ashish Kumar, Small Business Manager & Founder, StoxBazar

With the Sensex touching 80k, investors should approach this with cautious optimism. With the fiscal month and Q1FY25 earnings season upon us, it is crucial to stay on top of fiscal policy and corporate earnings. Diversifying your investments and focusing on fundamentally strong stocks can mitigate the risks. Reassess portfolios and consider booking partial gains while looking for opportunities in sectors poised for growth. Keep an eye on macroeconomic indicators and global cues to navigate potential market volatility.

Hemang Kapasi, Head of Operations, Sanctum Wealth

We advise our clients to reconsider their asset allocation, especially if they have benefited from the current rally in mid and small caps, to rebalance their portfolio. At a portfolio level, we believe it is a good time to start picking up some high-quality names that have been missed in the rally. While doing so, it is best to stick to names that have decent earnings quality but have been on the defensive due to near-term headwinds in earnings growth. Sectors like private banks, chemicals, IT and consumer fit the bill. There is a decent margin of safety in this space.

Neelesh Surana, Chief Investment Officer, Mirae Asset Investment Managers (India)

The market has achieved another milestone. We believe this is logical as markets are leading indicators of macroeconomic stability and future growth. We believe that India has strong and sustainable secular growth drivers and hence our view on the stock remains constructive. We advise investors to follow a well-rounded and balanced allocation towards stocks and remain engaged preferably through SIPs.

Hemant Kanawala, Senior Executive Vice President, Investments, Kotak Mahindra Life Insurance

Investors should prioritize long-term growth prospects and tailor their investments to their risk tolerance and investment horizon. Currently, large-cap stocks may offer better prospects than mid- and small-cap stocks, given their reasonable valuations.

In conclusion, the rise of the Sensex to 80,000 marks a significant moment in the Indian financial markets, but it also requires a strategic approach on the part of investors. By keeping informed about fiscal policies, corporate results and global signals and maintaining a diversified portfolio, investors can mitigate risk and capitalize on growth opportunities. Experts agree on the importance of a balanced and informed investment strategy, ensuring that investors are well-equipped to navigate potential volatility and continue their journey towards long-term wealth creation.

Disclaimer: The views and recommendations presented above are those of the individual analysts or brokerage firms and not Mint. We recommend that investors consult certified experts before making any investment decisions.