Market at record high: Adopt 'buy on dips' investment strategy, advise experts
Stock market today: The BJP’s decisive wins in the high-decibel bipolar contests in the Hindi heartland imply its firm footing in the 2024 general elections, said Nuvama in its report.
Stock market today: The Indian market continued to rally on Monday, December 4, with the benchmark indices hitting fresh peaks after the ruling Bharatiya Janata Party (BJP) clinched a thumping victory in three of the five state elections.
The Nifty50 marked a new high of 20,602.5, up 1.65 per cent, while the Sensex also marked a new feat, hitting a fresh record high of 68,587.82, up 1.64 per cent over the previous close.
Sectorally, amid broad-based buying, while the Oil & Gas and PSU Banking pack led the gains, healthcare, pharma, and media indices lagged in trade today.
The BJP’s decisive wins in the high-decibel bipolar contests in the Hindi heartland imply its firm footing in the 2024 general elections. From an economic standpoint, this lessens the risk of a populist turn and bodes well for continued government capex. Markets are likely to cheer the electoral outcome for now as it abates political risk. Even so, the medium-term outlook is contingent on earnings, liquidity, and rates, said Nuvama in its report.
The BJP in the recently held state assembly elections has outclassed expectations, hinting towards political stability. Now that the market has hit a new high, investors are facing the dilemma of whether to increase their allocation or adopt a more cautious approach.
"Despite the market being at an all-time high, we don’t see any significant correction in the market as the long-term story of India is intact. The Indian economy is the fastest-growing in the world, and the IMF has estimated that India will be the third-largest economy by 2027," said Rajesh Sinha, Sr. Research Analyst Bonanza Portfolio.
"We advise investors to remain invested in fundamentally good companies available at relatively cheap valuations with good growth prospects. However, if investors don’t want to take more risk, it is a good time to allocate assets towards less risky large-cap stocks," Sinha added.
"With markets at all-time highs and 2024 general elections in the next few months, we believe that “buy-on-dips” would be an ideal investment strategy going forward. With the interest rate cycle around the globe set for a lower trajectory on account of cooling inflation in 2024, we expect higher flows to emerging economies, especially India, opined Manish Chowdhury, Head of Research, StoxBox.
Chowdhury added that India is well-positioned to garner a larger chunk of FII flows compared to peers such as China and Taiwan due to its well-rounded positioning in terms of exports and consumption, prudent fiscal and monetary policy, and growing focus on strengthening the manufacturing ecosystem.
Apart from the structural benefits offered by India, a paradigm shift in terms of growing domestic participation in equity markets is likely to keep markets supported from a medium to long-term perspective, the expert said further.