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

Indian benchmark indices continued their record-high run on Thursday for the second straight session. The Sensex rose 406 points to its new high of 80,392.64 while the broader Nifty gained 114.5 points to its peak of 24,401.

The Sensex reached the 80,000 mark for the first time on July 3. Last week, on June 27, the Nifty also hit a new milestone by crossing the 24,000 level for the first time.

"Sensex crossing the 80,000 mark is a big achievement for the Indian stock market. 16 years ago it was at 8800 on the day when Lehman, the leading bank in the US markets, crashed. Nine times return in 16 years. However, four years ago during the time of Covid, it was at 26000, which seems unrealistic but it is true. It gives confidence that equity markets did perform well in the long run, we need patience and confidence while investing and even after it. Based on the current domestic macros, our advice is to continue investing systematically in equities with a long-term perspective," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

The recent rally has been boosted by supportive global data and monsoon progress in India. In the US, bond yields have softened, reinforcing the Federal Reserve's case for potential rate cuts this year due to weaker economic data. Lower bond yields and expectations of interest rate cuts in the US are encouraging Foreign Portfolio Investors (FPIs) to remain active buyers in the market.

Despite these record highs and the expensive valuations of Indian market, experts predict that the current bull run will continue. Just in the 4 sessions of July, the indices have gained almost 1.5 percent after an over 6.5 percent rise in June.

"We continue to remain positive on Indian markets from a long-term perspective given strength in earnings growth and its longevity and continued improvement in capital efficiency. Markets at the aggregate level may not look optically attractive, but business earnings delivery will be keenly watched out for. Those that deliver on to expected strong growth should continue to create value," said Sumit Jain, Deputy CIO, ASK Investment Managers.

With valuations so high, a continuing bull momentum and no imminent reasons for corrections, market participants are faced with both excitement and caution. Amidst this backdrop, industry experts share their perspectives on how investors should navigate the current market landscape. From sectoral preferences to prudent portfolio adjustments, their insights provide valuable guidance to investors.

Most experts expect the Nifty 2024-end target to be between 24,500 and 26,000 levels.

While the market continues its upward trajectory, investors are advised to approach with informed caution. Diversifying portfolios, focusing on strong fundamentals, and staying attuned to macroeconomic trends are key strategies recommended by experts to harness opportunities and navigate potential volatility in the months ahead.

Ravi Singh- SVP, Retail Research, Religare Broking Ltd.

Strategy is simple; one must stick to fundamentally strong stocks and should exit fundamentally weak companies at the current market levels. One should accumulate the quality names in every dip as positionally we are in a bull run. We believe that Nifty can touch the 24,900 mark by the year end.

Sonam Srivastava, Founder and Fund Manager at Wright Research

We foresee the Nifty trading higher with a target of 26k by year-end. A prudent market strategy for H2FY24 might involve a balanced portfolio approach. This could entail allocating investments towards both growth-oriented sectors like banking and consumer discretionary, alongside value stocks potentially found in the FMCG sector. Furthermore, incorporating defensive sectors known for stability, such as FMCG, can help mitigate potential market volatility. Success in H2FY24 hinges on active monitoring of economic data, central bank policies, and geopolitical developments, as these factors significantly influence market direction.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

We would prefer to go with a balanced approach where the portfolio is tilted more in favour of largecaps which are trading at better valuations compared to midcap/smallcaps. One must also prefer significant exposure to precious metals like gold and silver since they tend to perform well when the US Fed cuts interest rates. It also acts as a hedge in case of economic turmoil. Nifty could touch levels of 24,500 and 25,400 in the second half of the year 2024.

Ashish Kumar, smallcase Manager & Founder of StoxBazar

As Sensex hits 80k, investors should approach with cautious optimism. Given the budget month and Q1FY25 earnings season, it's crucial to stay informed about fiscal policies and corporate results. Diversifying investments and focusing on fundamentally strong stocks can mitigate risks. Re-evaluate portfolios and consider booking partial profits, while also 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 Equities, Sanctum Wealth

We advise an asset allocation revisit to our clients, especially if they have benefitted from the current rally in mid & smallcap to rebalance the portfolio. At the portfolio level, we think it’s a good time to start nibbling into some quality names that have been overlooked in the rally. While doing that, it’s best to stick to names that have decent earnings quality but have been on the backfoot because of near-term headwinds in earnings growth. Sectors like private banks, chemicals, IT, and consumers 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 reached another milestone. We believe this is logical as markets are leading indicators of macro stability and future growth. We believe that India has strong and sustainable drivers for secular growth, and thus our view on equities remains constructive. We would advise investors to follow a well-crafted and balanced allocation towards equities and remain committed preferably via SIP.

Hemant Kanawala, Senior Executive Vice President – Investment, Kotak Mahindra Life Insurance

Investors should prioritise the long-term growth prospects of the economy and align their investments with their risk tolerance and investment horizon. Currently, large-cap stocks may offer more favourable prospects compared to mid and small-cap stocks, given their reasonable valuations.

In summary, the ascent of the Sensex to 80,000 marks a significant moment in India's financial markets, but it also calls for a strategic approach from investors. By staying informed about fiscal policies, corporate results, and global cues, and by maintaining a diversified portfolio, investors can mitigate risks and capitalise on growth opportunities. Expert opinions converge on the importance of a balanced and informed investment strategy, ensuring that investors are well-equipped to navigate the potential volatility and continue their journey toward long-term wealth creation.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.