Bulls drive Sensex to 60,000; what should be the strategy?
The relentless Bull Run which began in April 2020 has taken the Sensex
beyond 60,000 as on September 24, 2021 and is now poised to push Nifty to 18,000 levels. The incredible return
of around 130%* from the lows of March 23, 2020 and above 60%^ for the last 12 months has created phenomenal
wealth for all kinds of investors - FIIs, DIIs and retail.
The Sensex has gone from approximately 50,000 to 60,000 (gain of around 20%) in less than eight months. The S&P BSE Sensex index closed above the 50,000 level on February 3, 2021 and on September 24, 2021 it touched the 60,000 mark for the first time.
The latest 5,000-point rally from 55000 to 60000 for the Sensex has come in record 28 trading sessions. The index had crossed the 55,000 mark for the first time only on August 13, 2021.
From Covid-19 lows in March 2020, the Sensex has jumped about 2.3 times*, more than any other major market in the world. The benchmark indices have rallied about 15% since August, even as most global markets have remained flat during this period.
Relentless buying by both domestic and global investors continued amid an easy monetary stance and optimism about revival in the domestic economy, propelling the markets to new lifetime highs.
Foreigner portfolio investors have pumped $9 billion (over Rs 65,000 crore) into domestic stocks this year. The increased pace of vaccination, fall in infections, easing of restrictions across the country, and improvement in high-frequency economic indicators have boosted investor sentiment.
The Sensex has gained 25% so far this year— the most among major global markets. The outperformance has increased India’s valuation premium to other global markets.
From witnessing Harshad Mehta scam in 1992, to blasts in Mumbai and BSE building in 1993, Kargil war (1999), terror attacks in the USA and Indian Parliament (2002), Satyam scam, global financial crisis, demonetisation, PNB scam and COVID-19, markets have faced many uncertainties over the years.
Several healthy triggers have also played a major role in market uptrend, with the likes of commodity boom in global markets, global liquidity, COVID-19 vaccine approval and rollout of vaccination programme.
What should be the investment strategy?
The first and foremost thing which we advise investors is to define their financial long-term/short-term goals and understand their own risk appetite. Investors should allocate assets in different asset classes, taking these two factors into consideration.
Our advice to investors remains to look at the equity market for the long-term goals and not get swayed by the euphoria or short-term blips or the past performance. We strongly believe that SIP (Systematic Investment Plan) remains to be one of the wisest ways to invest in the equity markets to average out the cost of investing over multiple market cycles.
Every financial goal needs to be addressed with an appropriate allocation. Once the choice is made, with information and understanding, one needs to stay focused and stay invested.
Investors should look for the right asset mix based on their risk appetite and financial goals. Consulting a Financial Advisor/Planner to plan and build your portfolio as per your goals and risk-taking ability should be the strategy for everyone.
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