With Nifty crossing the 20,000 mark once again, investors are contemplating their mutual fund investment strategies. According to market experts, the approach for investors using Systematic Investment Plans (SIP) remains unchanged, as SIP allows for the advantage of rupee cost averaging over the long term. It’s crucial to acknowledge that SIPs do not assure returns, but there is optimism that the market’s long-term upward trajectory will eventually yield profits for SIP investors.
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Triumph and Market Dynamics Nifty today
The NSE benchmark Nifty today achieved the 20,000 level on November 29, prompting a shift in some investors’ mutual fund strategies. Over the past three years, mid-cap and small-cap stocks have consistently outperformed their large-cap counterparts, maintaining a bullish market sentiment. Nifty crossed the 20,100 mark on the same day, marking the first occurrence since September 18. However, it closed at 20,096.60 by the end of trading, registering a gain of 206.90 points or 1.04 percent. Midcap indices achieved new peaks for the 10th consecutive day.
Expert Insights: Foreign Institutional Investors and Market Predictions for Nifty today
Santosh Meena from Swastika Investmart anticipates increased foreign institutional investor (FII) inflows into the Indian equity market, driven by peak interest rates in the US and a declining dollar index. Despite robust fundamentals, potential market volatility is foreseen due to state election results. Meena sees any corrections resulting from this as a favorable buying opportunity, suggesting the market is poised for a pre-election rally. He predicts Nifty crossing the 21,000 mark soon, with the 19,500 level acting as a support level.
Nifty 50 reached this milestone for the first time on September 11 this year. On a year-to-date basis, the Nifty 50 Total Return Index (TRI) has increased by 47 percent, with the Nifty Midcap 100 TRI up by 105.9 percent. Additionally, the Nifty Smallcap 250 TRI has experienced a significant rise of 117.3 percent
Rajeev Thakkar from PPFAS Asset Management Company emphasized that recent gains in the equity market have been substantial. However, he cautioned against assuming similar returns in the future and recommended maintaining a conservative approach to handle potential financial emergencies.
When an index hits an all-time high, investors are most concerned about whether valuations are too high. Mutual fund investments in small and mid-cap stocks have significantly contributed to the market rally in the last two years. Additionally, these companies have been less impacted by inflation, benefiting from strong demand in the economy. Foreign investors have also been observed returning to the market.
Caution Amidst Optimism: Insights from Fund Managers
Christy Mathai, a fund manager at Quantum Mutual Fund, noted that large-cap stocks currently appear more favorable than small and mid-caps, which seem expensive at the moment. Rajeev Thakkar acknowledged positive corporate results but expressed concerns about high valuations. He mentioned the unpredictability of market movements in the near term and highlighted that domestic consumption-based stocks have remained expensive despite corrections in the past year.
Examining the market perspective, the resurgence of energy prices and the approach of an election year in India may lead investors to remain cautious. Quantum Mutual Fund suggests that, currently, valuations of financials, banks, IT companies, and select auto companies appear favourable.
Valuations and Investment Choice
The achievement of Nifty reaching the 20,000-point milestone is significant. However, whether investors should consider adjusting their mutual fund investment strategy depends on various factors, such as their financial goals, risk tolerance, and the current status of their investment portfolio.
According to market experts, for investors utilizing Systematic Investment Plans (SIP), there is no need to make changes. SIP allows investors to benefit from rupee cost averaging over the long term. It’s crucial to understand that SIPs don’t guarantee returns, but there is optimism that the market will experience long-term growth, ultimately benefiting SIP investors. In contrast, lump sum investors may choose to delay their investments given the current market conditions.
Expert Advice: A Diverse Palette of Investment Options
Rushabh Desai, Founder of Rushabh Investment Services, pointed out that while large-cap stocks haven’t grown as rapidly as mid-caps and small-caps, the valuations across all three segments are above their long-term averages. He expressed concern about the market being expensive, and at the moment, he isn’t comfortable investing his own money and that of his clients outright in the market. He suggests that this might be a favorable time for investors looking to book profits within the next six months to a year, recommending a shift towards fixed income.
Similarly, Amol Joshi, founder of PlanRupee Investment Services, advises lump sum investors with a three to five-year horizon to consider investing in Balanced Advantage Funds or Multi-Asset Funds.
Given the recent market uptrend, it’s a suitable time to realign your portfolio to your desired asset allocation. For instance, if your target asset allocation is 70% equities and 30% other assets, but the market rally has shifted it to 85-15, you can use this opportunity to rebalance and bring it back within your target range.
Purnima Katpadi, the founder and investment expert at Simplesolution4u, a Mangalore-based mutual fund distributor, emphasizes that even as the market achieves new milestones, it doesn’t warrant constant changes in our investment strategy.
She suggests that decisions should align with the original purposes for which we invested. Exiting a fund should only occur once the financial goals have been met. Attempting to exit and re-enter the market hastily may result in missed opportunities. Additionally, Purnima highlights the presence of exit loads on mutual fund withdrawals, coupled with fees and taxes, which can impact returns. Therefore, she advises a thoughtful and well-planned portfolio churning strategy in such situations.
As Nifty surpasses 20,000 again, the strategy for investing in mutual funds remains stable, particularly for investors using Systematic Investment Plans (SIP). The SIP approach allows for the advantages of rupee cost averaging over the long term. However, it’s crucial to acknowledge that SIPs don’t assure returns, but there is optimism that the market will experience long-term growth, ultimately benefiting SIP investors.
Performance Metrics: Nifty’s 2023 Journey
On November 29, the NSE benchmark Nifty 50 index surged past the 20,000 level, prompting a reconsideration of mutual fund investment strategies by some investors. Over the past three years, mid-cap and small-cap stocks have consistently outperformed large-cap stocks. Despite this, the market continued its bullish trend today.
Nifty reached a new milestone by crossing 20,100, marking the first occurrence since September 18. However, by the end of the trading day, it closed at 20,096.60, gaining 206.90 points or 1.04 percent. Notably, midcap indices closed at new peaks for the 10th consecutive day.
Santosh Meena from Swastika Investmart suggests that with peak interest rates in the US and a falling dollar index, foreign institutional investor (FII) inflows are anticipated in the Indian equity market. Despite strong fundamentals, there is a potential for market volatility due to state election results. However, Meena sees any corrections resulting from this as a favorable buying opportunity, indicating that the market might be gearing up for a pre-election rally. He predicts that Nifty will soon surpass 21,000, with the 19,500 level acting as a support level.
The Nifty 50 index reached this milestone for the first time on September 11 this year. On a year-to-date basis, the Nifty 50 Total Return Index (TRI) has risen by 47 percent, while the Nifty Midcap 100 TRI has experienced a substantial increase of 105.9 percent. Similarly, the Nifty Smallcap 250 TRI has surged by 117.3 percent.
Rajeev Thakkar from PPFAS Asset Management Company highlights the recent high equity returns but advises against assuming similar returns in the future. He recommends a conservative approach for future equity returns to effectively navigate financial emergencies.
As the index hits an all-time high, investor concerns center around whether valuations are becoming expensive. Investments in small and mid-cap stocks through mutual funds have played a crucial role in the market rally over the last two years. Despite the potential impact of inflation, these companies have thrived due to robust demand in the economy, attracting foreign investors back to the market.
Crafting Your Investment Strategy
Christy Mathai, fund manager at Quantum Mutual Fund, observes that large-cap stocks currently have a better standing than small and mid-caps, which appear expensive. Rajeev Thakkar echoes this sentiment, noting good corporate results but expressing concerns about high valuations. Market movements may remain unpredictable in the near term, making it challenging to predict future developments. Thakkar further notes that domestic consumption-based stocks have been consistently expensive, even after corrections over the past year
From a market perspective, energy prices are on the rise once again, and India is approaching an election year. Given this scenario, investors might find themselves compelled to remain on the sidelines. Quantum Mutual Fund suggests that, currently, the valuations of financials, banks, IT companies, and select auto companies appear favorable.
The achievement of Nifty reaching the 20,000-point milestone is noteworthy. However, whether investors should consider adjusting their mutual fund investment strategy depends on various factors, including their financial goals, risk tolerance, and the current status of their investment portfolio.
Expert Advice: A Diverse Palette of Investment Options
Experts in the market state that there’s no need for a change in strategy for investors using Systematic Investment Plans (SIP). SIP allows investors to benefit from rupee cost averaging over the long term. It’s crucial to understand that SIPs don’t guarantee returns, but there is optimism that the market will experience long-term growth, ultimately benefiting SIP investors.
However, lump sum investors may choose to delay their investments depending on the market conditions. Rushabh Desai, Founder of Rushabh Investment Services, notes that while large-cap stocks haven’t grown as rapidly as mid-caps and small-caps, the valuations across all three segments are above their long-term averages. Desai expresses discomfort with the current market, stating that it is extremely expensive and not suitable for outright investment at this time.
Desai further suggests that this may be a favourable time for investors aiming to book profits within the next six months to a year. He recommends booking profits and redirecting them into fixed income.
Similarly, Amol Joshi, founder of PlanRupee Investment Services, advises lump sum investors with a three to five-year horizon to consider investing in Balanced Advantage Funds or Multi-Asset Funds.
With the recent market upswing, now is an opportune time to realign your portfolio to your desired asset allocation. For instance, if your target asset allocation is 70% equities and 30% other assets, but the market rally has shifted it to 85-15, you can utilize the momentum to rebalance and bring it back within your target range.
The Art of Strategic Investing: Insights from Purnima Katpadi
Purnima Katpadi, founder and investment expert at Simplesolution4u, suggests that while the market will continue to achieve milestones, it doesn’t necessitate constant changes in strategy. She emphasizes the importance of staying invested for specific purposes and recommends exiting a fund only once financial goals have been met. Attempting to exit and re-enter the market hastily may result in missed opportunities. Katpadi also cautions about exit loads on mutual fund withdrawals, coupled with fees and taxes, impacting returns. Therefore, she advises a thoughtful and well-planned portfolio churning strategy in such situations.
In conclusion, as the Nifty crosses the 20,000-point mark for the third time, the stability of investing in mutual funds, particularly for SIP investors, remains unwavering. The unique benefits of rupee cost averaging and a long-term perspective of SIPs align with the market’s growth trajectory. However, as with any investment decision, individual goals and risk tolerance must be carefully considered.
Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.
