Sensex hits 50,000. What should mutual fund investors do?

Benchmark index Sensex has breached yet another psychological level, hitting the 50,000 mark on Thursday. The index is up 93% from the March lows when markets had crashed as national lockdown to prevent the spread of Covid was announced. This up move in Indian stock market in is in-line with the US equities, which closed at a record high on hopes that US President Joe Biden will provide more economic stimulus to boost demand hit by the pandemic. What should investors do? Should they book their gains now or continue to invest more?

LiveMint spoke to the mutual fund managers and advisors to help our readers formulate a strategy without getting carried away by the noises.

Here are the comments from mutual fund managers:

Nilesh Shah, Group President & MD, Kotak Mahindra AMC

Sensex touching 50,000 in 2021 is like Indian cricket team winning test series in Australia against all odds of Covid 19. While economic data is about the past which is improving month on month, Sensex is reflecting the positivity about the future.

Manish Gunwani, CIO-Equity Investments, Nippon India Mutual Fund

While at one level 50,000 is just a number, the fact that it has come so much faster than most of us thought a few months back is testimony to the remarkable resilience and massive potential that the Indian economy presents. As long as the economy delivers high nominal GDP growth equities will compound and investors should benefit from this by taking a long term view.

Sorbh Gupta- Fund Manager- Equity- Quantum AMC

Six months ago with the pandemic raging no one would have thought about sensex hitting 50,000 mark. Better and quicker than expected economic recovery and strong FPI inflow has made this possible. Investors should hold onto their equity allocations and map them to their financial goals. Any fresh allocation to equities should be in a staggered manner.

Waqar Naqvi, CEO - Taurus Mutual Fund on today's market moment.

The rally in the Banking, PSU, Metals, Auto and IT sectors has helped the Sensex cross the landmark number of 50,000 setting a record high. If the Micaps join the party, which is a high probability, on the back of the vaccinations and the anticipated announcements in the Central Budget to boost demand, the stock markets should continue to do well in the foreseeable future. From this level minor ups and downs in the index are not going to bother investors.

Ashwin Patni, Head Products & Alternatives, Axis AMC

India has been a land of opportunity for investors and we are constructive on the growth story that is India. Sensex @ 50k is just a number echoing the growth of the economy. Investors should follow a disciplined approach to investing and plan their investments in line with their financial goals.

Here's what mutual fund advisors said about the strategy as Sensex has breached 50,000 levels.

Raghvendra Nath, MD, Ladderup Wealth Management

Should we stay invested, sell or invest more are the big questions playing on the mind of investors after witnessing 50,000 on Sensex. The market rally is being driven by ample liquidity, corporate resilience and broader Economic recovery. For someone who is already invested, I think they should enjoy these returns as the long term outlook is quite bright and so the markets will only gather steam in the next 4-5 years. For someone looking to enter the mutual funds, it would be wise to put the money in a liquid fund and do a systematic transfer for the next 1 to 2 years. There has been an unprecedented rally in the last 3 months and the valuations are at record levels. There are high chances that one may catch lower levels in the next few months.

Tarun Birani, Founder & CEO, TBNG Capital Advisor

Sensex crossing 50,000 levels is a remarkable recovery of nearly double its value, as compared to the March 2020 nose dive.

My two cents to investors with a goal-driven approach to investing would be to take a closer look at their portfolios and their set goals. Investors who may have achieved their targets may go ahead and book their profits. At this specific time, investors should pay attention to their portfolios which may need rebalancing to ensure their portfolios aren’t overweight in any specific asset class. Investors must pay keen attention to the right asset allocation which is key to a balanced portfolio and vital to achieving their financial goals.

Sustained bull-run is backed by swift economic recovery and has been fuelled by the Central Bank’s stimulus and the negative real interest environment. In the broader markets, we have banking, MidCap, and SmallCap indices that are trading at relatively cheaper valuations and ready to be cherry-picked.