Nifty crosses 18,000-mark for the first time since April; What should be your strategy now

Indian benchmark Nifty crosses the 18,000-mark on Tuesday (September 13) for the first time since April 2022. The index rose around 0.8 percent in intraday deals today to hit its day's high of 18,080. Meanwhile, Sensex also jumped 450 points to cross 60,000.

Nifty has reclaimed the 18,000 mark after spending nearly a month in a corrective phase. Almost all sectors are seeing contributing to the move. The ongoing market rally is primarily driven by the sudden reversal of FII strategy: from relentless sellers to relentless buyers. Retail investor support and fundamental support to the market from a strong economy are aiding the rally.

Though some analysts are cautious due to expensive valuations, foreign investors continue to invest in Indian equities. They have bought Indian equities worth ₹64,000 crore since July after a 9-month hiatus. India has also performed better compared to global peers. For the year, the Nifty50 is up around 4 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan has declined nearly 20 percent.

"Now, this has become a classic momentum-driven market which has the potential to take the indices to new record highs soon. FOMO factor (since this rally was mostly unexpected) and a short covering can aid the market momentum further," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services predicts.

Ajit Mishra, VP - Research, Religare Broking said that Indian markets are less than 3 percent away from the record high i.e 18,600 level and all indications are in the favour of retesting the same soon.

Strategy going ahead? 

Amid the current environment, Mishra advises investors to focus on stock selection and giving preference to the top performing sectors like banking, financials, auto and FMCG and remaining selective in others. While the broader indices, midcap and smallcap, are also trading in tandem with the benchmark, Mishra recommends sticking to the fundamental sound counters and don’t get carried away with the rebound in penny stocks.

Commenting on the recent rise, Pranjal Kamra - CEO, of Finology Ventures said, "markets are taking cues from the economic revival. Investors all over the world are quite confident in the measures taken by governments and central banks, which are pushing indices northwards. Nifty has already hit the 18K benchmark."

This is a good time to liquidate your short-term holdings if any. Also Fresh investments should not be done at once, but rather in a staggered manner across the market cycle, he advises investors.

Meanwhile, Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS believes that the current momentum in the equity markets can sustain, but he advises investors to raise some cash at the current levels, which can be deployed if the markets correct on either rate hikes or energy prices moving up again.

Outlook

Sunil Damania, Chief Investment Officer at MarketsMojo is confident the market will continue to do well as levers for growth continue.

"India's PLI scheme, China plus one strategy, India as among the fastest growing economies in the world and inflation continuing to remain soft are all indicators that the market should do well. India is in a very sweet spot where growth would be high and inflation low. These two combined are rare to find in a volatile world economy. No fund manager can afford to ignore this. Therefore, we believe that 18k is just a number and that Indian indices will continue to rise even further," Damania said.

Kamra also believes that considering the improving economic scenario and cooling inflation, it is expected that the markets will hover around this level, if not rise from here.

Angel One said that India is in a relatively stronger position versus other Advanced and Emerging economies that are experiencing high inflation and lower growth.

“Our strong fundamentals and external position are expected to drive further investments and cushion us from external shocks, respectively. At current levels, the Nifty is trading at a P/E multiple of 19x on rolling one-year consensus earnings, which is below its 10-year average of 20x. Though the upside may be limited in the near term, the long-term prospects remain intact given the low corporate leverage levels, the better position of financial institutions, and the revival of the investment cycle in India,” the brokerage stated.