New Delhi: Experts said the current rally in the stock market is due to strong fundamentals and robust corporate earnings and retail investors may look for buying opportunities to accumulate quality stocks.
Benchmark Sensex touched 76,000 for the first time on Monday, while Nifty hit a new lifetime peak of 23,110.80.
Last week too, stock market benchmarks Nifty 50 and Sensex touched their respective all-time highs on two occasions.
Experts say corporate balance sheets are much cleaner now than they were 5 years ago. Most corporates have reduced their balance sheets and left room for capacity expansion.Narendra Solanki, Head Fundamental Research-Investment Services, Anand Rathi, “The recent rally in the Indian market has been supported by strong domestic macroeconomic fundamentals such as GDP growth and manufacturing PMI (Purchasing Managers Index). Even inflation "Pretty much stable." Share and stock brokers said.
“Diversifying the portfolio, investing in quality stocks with strong fundamentals and avoiding speculative trading can help reduce risk,” said Vinnaya Mehta, founder and director of wealth management company The Infinity Group.
“It is important to avoid short-term investments… instead, focus on a long-term investment horizon of at least two to three years,” Mehta said.,
Instability is expected to continue till the last phase of elections i.e. June 1. However, despite these fluctuations, a major correction in the market is unlikely ahead of the election results as the market has already taken into account the possible outcomes, he said.
Tejas Khode, co-founder and CEO of trading platform FYERS, said with quarterly earnings season underway and many companies declaring above-average results, valuations do not look too expensive.
While some sectors like automotive, realty, capital goods, infrastructure, consumer discretionary have outperformed their fundamentals, banking, financials, FMCG, IT and chemicals are at reasonable valuations. Investments should be tailored to individual financial goals, capital availability and risk tolerance.“Retail investors should take a long-term approach, avoid timing the market and consider systematic investment plans (SIPs) and diversified portfolios to mitigate risks and capitalize on opportunities,” Khoday said.
The 30-share BSE Sensex has gained 4 percent so far this year. The index closed at 75,170 points on Tuesday.
Indian equities have gained despite foreign portfolio investors (FPIs) pulling out capital from equity markets. So far this year, FPIs have withdrawn more than Rs 20,700 crore from equities.Kotak Mahindra Bank Chief Economist Upasana Bhardwaj said, "Throughout this cycle, I would say there is not much heat in the stock markets. There are some reasonable fundamental factors that could support the upside in the equity market."
Bhardwaj also said that given that there is minimal retail participation in equities, there is still a long way to go to increase retail participation structurally. “I think there is more room for further upside in equity markets,” he said.
Market experts believe the composition of the Indian equity index, due to its overweighting of sectors such as financials, IT, auto and FMCG, generally commands higher valuations than the global level.According to Pradeep Gupta, vice-chairman, Anand Rathi Group, this suggests that Indian equities are currently fairly valued and these valuation multiples are likely to persist over the medium to long term.
Benchmark Sensex touched 76,000 for the first time on Monday, while Nifty hit a new lifetime peak of 23,110.80.
Last week too, stock market benchmarks Nifty 50 and Sensex touched their respective all-time highs on two occasions.
Experts say corporate balance sheets are much cleaner now than they were 5 years ago. Most corporates have reduced their balance sheets and left room for capacity expansion.Narendra Solanki, Head Fundamental Research-Investment Services, Anand Rathi, “The recent rally in the Indian market has been supported by strong domestic macroeconomic fundamentals such as GDP growth and manufacturing PMI (Purchasing Managers Index). Even inflation "Pretty much stable." Share and stock brokers said.
“Diversifying the portfolio, investing in quality stocks with strong fundamentals and avoiding speculative trading can help reduce risk,” said Vinnaya Mehta, founder and director of wealth management company The Infinity Group.
“It is important to avoid short-term investments… instead, focus on a long-term investment horizon of at least two to three years,” Mehta said.,
Instability is expected to continue till the last phase of elections i.e. June 1. However, despite these fluctuations, a major correction in the market is unlikely ahead of the election results as the market has already taken into account the possible outcomes, he said.
Tejas Khode, co-founder and CEO of trading platform FYERS, said with quarterly earnings season underway and many companies declaring above-average results, valuations do not look too expensive.
While some sectors like automotive, realty, capital goods, infrastructure, consumer discretionary have outperformed their fundamentals, banking, financials, FMCG, IT and chemicals are at reasonable valuations. Investments should be tailored to individual financial goals, capital availability and risk tolerance.“Retail investors should take a long-term approach, avoid timing the market and consider systematic investment plans (SIPs) and diversified portfolios to mitigate risks and capitalize on opportunities,” Khoday said.
The 30-share BSE Sensex has gained 4 percent so far this year. The index closed at 75,170 points on Tuesday.
Indian equities have gained despite foreign portfolio investors (FPIs) pulling out capital from equity markets. So far this year, FPIs have withdrawn more than Rs 20,700 crore from equities.Kotak Mahindra Bank Chief Economist Upasana Bhardwaj said, "Throughout this cycle, I would say there is not much heat in the stock markets. There are some reasonable fundamental factors that could support the upside in the equity market."
Bhardwaj also said that given that there is minimal retail participation in equities, there is still a long way to go to increase retail participation structurally. “I think there is more room for further upside in equity markets,” he said.
Market experts believe the composition of the Indian equity index, due to its overweighting of sectors such as financials, IT, auto and FMCG, generally commands higher valuations than the global level.According to Pradeep Gupta, vice-chairman, Anand Rathi Group, this suggests that Indian equities are currently fairly valued and these valuation multiples are likely to persist over the medium to long term.
