Nifty Continues To Soar Above 20,000, Here's What Mutual Fund Investors Should Do

The beginning of this week surely did not bring with it Monday morning blues for India¡¯s stock market investors, with NIFTY crossing the 20,000 mark for the first time (on September 11).

NIFTY Continues To Soar Above 20,000 Mark

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NIFTY 50 is up more than 10% this year to date. It ended 0.38% higher today at 20,070.

Reacting to NIFTY hitting the 20,000 mark, Ashishkumar Chauhan, MD and CEO of the National Stock Exchange (NSE), said, ¡°India has come a long way in the last 30 years in its markets participation. We have a longer way to go. This is a good beginning. There will be ups and downs in the journey going forward - like in the past.¡°

¡°India will continue to progress and markets will continue to reflect that progress as seen in the Nifty 50 index. NSE will continue to provide fair, efficient, transparent, orderly, low-cost, highly-automated markets to India in time to come,¡± he added.

Also Read: World's Biggest Stock Market Crashes Of The 20th Century

What Mutual Fund Investors Should Do?

While stock market investors must be overjoyed with the NIFTY crossing the historic mark, a dilemma that awaits them is regarding what to do. Whether to stay invested, redeem, or invest more? If yes, then where?

If you too are stuck in this dilemma, here are the opinions and suggestions of some industry experts, which can help you make an informed decision regarding what to do as an investor, and how to perceive this soaring of stock market.

"Recent equity returns have been high. One should not project these returns as normal returns for the future. A conservative estimate for future equity returns will enable investors to meet any financial contingency," said Rajeev Thakkar, Chief Investment Officer (CIO) and Director of PPFAS Asset Management Company.

Thakkar believes that while corporate results have been good, valuations are somewhat elevated, adding that near-term market movements are unpredictable, and it is not possible to say what will happen in the coming days. Domestic consumption-oriented segments have been expensive for some time and continue to remain so despite the time correction seen in some of these stocks over the last year. In terms of the market outlook, energy prices have again started to move up. Also, India is entering an election year, which is always a big unknown. This may force investors to stay on the sidelines.

"Going forward incrementally, clearly large-caps look much better placed compared to small- and mid-caps, because smaller-caps are somewhere around 2019-2020 levels, which is a bit higher than what we've seen historically," said Christy Mathai, Fund Manager-Equity, Quantum Mutual Fund.

"These pockets have reasonable valuations. Banks are fairly priced. You have comfortable valuations in IT, even though some demand has gone out of the system. And in autos, the volume recovery has been very strong," said Mathai.

Also Read: Benefits Of Investing In Mutual Funds Through SIPs

Who Should Redeem & Who Shouldn't?

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On the other hand, as per a Money Control report, Poornima Katpadi, founder and investment specialist at Simplesolution4u, a Mangalore-based distributor, said, "The markets will continue to see historical milestones down the line. It doesn't necessarily mean that we have to keep changing our strategy because we have invested (for certain purposes). We should exit the funds only when we have achieved those financial goals. We may lose market opportunities if we exit now and try to return later."

"Even though large-caps haven't rallied as sharply as mid- and small-caps, the valuations of all three segments have inched above their long-term averages. The markets are not in a bubble, but they are definitely in expensive territory. At least at this point in time, I'm not comfortable putting my money and my clients¡¯ money in a lump-sum fashion in the market," said Rushabh Desai, Founder, Rupee With Rushabh Investment Services, adding that this is a good time for investors whose goals are coming up in six months to one year to book profits and move into fixed income.

Experts Share Their Predictions For NIFTY

A sustainable move above the 20K mark is expected to pull Nifty towards the next overhead resistance of around 20,450 levels (38.2% Fibonacci extension). Immediate support is placed at 19,850 levels, said Nagaraj Shetti of HDFC Securities, as per ET. Jatin Gedia, Sharekhan by BNP Paribas said "We can expect the positive momentum to continue. On the upside, we expect the Nifty to target levels of 21000 from a short-term perspective. In terms of levels, 19865 ¨C 19810 is the crucial support zone while 20,200 ¨C 20,250 shall act as an immediate hurdle zone."

Amol Athawale, Kotak Securities, said "Market sentiment is expected to remain upbeat as long as the Nifty stays above the 19,900 level. On the upside, we can identify an immediate resistance zone between 20,100 and 20,200. If there is a convincing breakthrough above 20,200, it could pave the way for the Nifty to advance towards the 20,500 mark."

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Also Read: Explained: Sensex, Nifty & Their Role In India's Stock Market

How Is Sensex Performing?

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While NIFTY enjoys above the historic 20,000 mark, Sensex too has risen more than 10% this year till date, having touched its new all-time high multiple times this year, and still hovering around that mark, thus making it a strong possibility that Sensex too may rise to a fresh all-time high soon. Sensex ended 0.37% higher today at 67,466.99.

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