Nifty 50 at a record high, up 13% in 3 months; is it time to book profit? Here’s what top experts say
Benchmark Nifty 50 hit a record high of 22,215.60 on Tuesday. It has gained nearly 13 per cent in 3 months. Market analysts are positive about long-term prospects but foresee short-term volatility ahead of General Elections.
The domestic market is witnessing strong bullish momentum. Benchmark Nifty 50 hit a fresh record high of 22,215.60 in intraday trade on Tuesday led by gains in banking and financial heavyweights.
The Nifty 50 is up nearly 13 per cent in three months. The index hit its 52-week low of 16,828.35 on March 20 last year. At the current level of 22,196.95, the index is up 32 per cent from its 52-week low.
Also Read: Stock market today: Nifty 50 hits record high, crosses 22k for the first time; HDFC Bank shines
The index has clocked strong gains in the last one year despite several headwinds, including sticky inflation, elevated interest rates and geopolitical tensions.
Analysts are positive about the long-term prospects of the market. However, the market may see strong volatility in the short term, especially ahead of the General Elections.
We talked to several analysts to understand what investors should do. Should they book some profit at this juncture? Here's what they said:
Fundamental views
Nilesh Shah, MD, Kotak Mutual Fund
What the market does is not in our control. Due to the rally, if you have become over-invested in equity or small and mid-cap as an asset class, it is time to take some profit out to become equal weight.
One can book profit in a calibrated manner as the momentum is strong. If you are equal weight, then moderate your future return expectations.
If you are underweight then invest in instalments rather than lump sum with a long-term view. Most importantly keep some dry powder to add when valuations become attractive.
Deepak Jasani, Head of Retail Research, HDFC Securities
With the Nifty having touched a fresh all-time high, we could expect a further rise in the Nifty 50 in the near term.
However, in terms of triggers, the results season has ended and the elections are some time away. Announcement of dates of general elections could infuse some volatility in the markets.
Also changing expectations on the timing of rate cuts by the US Fed could influence the direction and momentum of the markets.
Investors can look at rebalancing their overall asset allocation as well as their equity portfolio. This could raise some cash which can later be used for buying stocks whenever the markets correct.
Stocks that have risen too fast and beyond their near-term justification may be looked at from booking partial profits.
Trivesh D, COO, Tradejini
The Nifty 50 has had an impressive run. While this growth is certainly attractive, it's important to remember that the market can be unpredictable and subject to sudden changes.
In times like these, it's wise to take a step back and assess your investments.
Selling off completely might be premature. But, also it is advisable to take some profits off the table and diversify investments. By diversifying your investments, you can reduce your exposure to any one market or sector and protect your wealth from unexpected downturns.
One strategy to consider is a multi-asset approach. This means investing in a variety of assets, such as stocks, bonds, and gold, to spread risk and increase potential returns. A gradual increase in allocation to gold and long-tenure debt may be a prudent strategy as we move closer to the Lok Sabha Elections this year.
Another reason to consider diversifying is the current global uncertainty. Also, due to volatility, there can be plenty of potential risks that could affect the market. Therefore, by investing in a variety of assets, you can protect your portfolio from these uncertainties.
Our Indian economy enjoys strong fundamentals: vibrant growth, moderate inflation, and a stable government outlook post-election.
So, be prepared to adapt your strategy as market conditions change. Don't be overly greedy or fearful. Take some profits while keeping an eye on the future.
Technical views
Rupak De, Senior Technical Analyst at LKP Securities
Nifty has reached the top following a consolidation breakout on the daily chart. On the weekly chart, it has also experienced a consolidation breakout, indicating an increase in optimism.
Additionally, the index has been consistently staying above the crucial short-term moving average. However, given the decent rally of approximately 12 per cent in the last three months, we may observe limited upward movement.
Therefore, it would be prudent for traders to contemplate booking some profits at this point and holding some cash.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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