India bought 137 tonnes of gold in first quarter of 2024

BSE headquarters at Dalal Street, Mumbai. (Photo Credit: PTI)

The BSE Sensex reached an all-time high yesterday, with Nifty50 also inching towards record highs. However, both indices were pulled through red today, majorly by stocks of IT, FMCG and PSU banks, making investors looking to exit the markets on a high, jittery. 

Nifty closed at 18,771.25 points, while Sensex closed at 63,238.89 points, after nose diving 0.45% from an all-time high of 63,601.71 points.  Nevertheless, experts are suggesting staying put in the market, instead of simply looking to earn returns in the short-term. 

Data suggests that since October 2021, the Nifty50 index has tumbled by 10-15% on 4 occasions, particularly after breaching the 18,000 mark. As such, many investors, who see market highs as a profit-booking avenue, should exercise caution. 

What should investors do?
Says Viral Bhatt, who heads MoneyMantra, a Mumbai-based personal finance advisory, investors must not choose profit booking over disciplined investing through SIPs  only on the basis of the market’s bull run over the last 3 months. 

“The current bull run is still relatively young and there is still a lot of potential for growth in the market. Plus, the market is cyclical and there will always be ups and downs. Just because the market is doing well now doesn’t mean it will continue to do so forever. But, by continuing to invest through SIPs, you could potentially lock in some gains”, he notes. 

With the number of registered investors on BSE jumping 23.54% since 2022, it is clear that more and more people are flocking to the stock market. Bolstering the rush further are the positive purchase sentiments by both domestic and foreign institutional investors. Till June 22, 2023, FIIs have invested a net of Rs 7,233 crores in the Indian markets, while DIIs have put in Rs 6,706.84 crores. 

Additionally, fears of impending recession in the US, inflation rates in UK staying high, unmoved at 8.7% and an economic slowdown in the neighboring China have further put India in spotlight as a favorable investment destination.

SEBI-registered registered investment advisor Jay Thacker says, “While caution and realism are advised in the short term, several tailwinds suggest a potential upside in the coming months. Key drivers of the market include the robust fundamentals of India and a better-than-expected global outlook, particularly in the US markets.

“Volatility is expected in the near future, with instances of profit booking as some stock valuations extend beyond their intrinsic value, especially in sectors that have performed strongly in the past six months”, he further added.

Since March 2023, FIIs have seemingly been bullish on India’s overall growth story, investing around Rs 27,856.48 crores in the economy. In part, this is due to the strong performance of small and medium enterprises.

The BSE SME Index has risen 14% over the last 6 months, with SMEs raising Rs 2,200+ crores via IPOs during 2022-23. However, investing via SIPs through this bull run is not enough. Agra-based financial planner Shifali Satsangee highlights the need to reassess and rebalance your portfolio during this time, to ensure the addition of high-performers, and deletion of non/weak performers, if any. 

“This is also the time to align your portfolio with your risk tolerance and investment goals. The key is to stay disciplined and don’t panic sell if the market does experience a downturn”. 

Which sectors will do well? 

Thacker highlights that large-cap stocks are anticipated to attract a significant share of inflows in the short term, while mid-cap and small-cap stocks may experience a temporary cooldown. “Investors are advised to focus on high-quality stocks and be prepared for increased volatility. Sectors poised for a turnaround and likely to drive growth in the coming months include Information Technology, Pharmaceuticals, Financial Services, and Infrastructure”, he suggests.

Dikshit Mittal, Fund Manager & Senior Equity Research Analyst at LIC Mutual Fund Asset Management Ltd sees potential in sectors like banking and NBFC and autos.

“Sectors having good earning visibility like Banking, Building material (proxy to real estate), manufacturing, and auto sector are expected to do well. In later part of the year, consumer discretionary may also come back and can do well”, he adds.