Equity barometer the Nifty50 hit its 52-week low of 15,183.40 on June 17 on concerns over rate hikes, recession and outflow of foreign funds.
However, since then, it has bounced back enduring bouts of volatility. From its 52-week lows, the Nifty is now 16% up.
Broadly, the Nifty has been in a range of 17,000 to 18,000 since August; the index has been struggling to sustain above the 18,000 level.
After the dust settles around rate hikes and inflation eases, the market may march toward its fresh all-time high. Volatility is expected to continue but a rally in coming months cannot be ruled out, say analysts.
As the market has been surrounded by concerns this year so far- in terms of the Ukraine war, inflation, rate hikes and recession - there were many risk-averse investors who preferred to sit on cash and missed the recent rally. Decoupling of the domestic market from its global peers is a reality and even FIIs might have missed the rally and are now getting aggressive.
What should you do?
Concerns for the market still persist which will keep it shaky but analysts have been advising buying on dips in this market. If you sit on cash, chances are you will miss the next rally too. But be cautious in deploying money and select stocks and sectors that are fundamentally sound and have a positive outlook.
Indian economy is in relatively better shape at this juncture which is giving hope to market participants. This is why the Nifty has outperformed many major global markets this year so far.
"Continuous money flow in recent months has kept the Nifty up. India is going through an extremely bullish phase where small corrections make it look oversold. Therefore, waiting at the sideline with cash may not be the safest strategy; one should Keep buying the small dips to gain from the current market trend," said Rupak De, Senior Technical Analyst at LKP Securities.
Mitul Shah, Head of Research at Reliance Securities, is also of the view that investors should utilise some cash in the market and add further if the market corrects.
Shah believes due to ongoing global issues, likely Fed rate hikes, and RBI’s expected increase in interest rate in upcoming policy, the market may be under pressure in the near term. This would provide a better opportunity and one may invest during this fall, who missed earlier.
He expects outperformance of mid and smallcap to continue with the strong economic rebound, normalised commodity prices, inflation within the targeted range and better visibility expected by the second half of FY23. FII investment has started in the past two months and is likely to continue in the mid and smallcap stocks.
"Many small caps and midcaps are trading way below historical highs and are available at a reasonable valuation. On further correction, valuation becomes attractive and risk-reward makes a favourable case for investors, providing better investment opportunity," said Shah.
Bet on the domestic theme which is expected to remain resilient in case of a global recession. Deploy cash gradually in this market to reap the benefits of the India story.
"India remains a prominent spot amidst the global gloom and thus remains an attractive play. One could initiate fresh positions in a gradual way,' said Paras Bothra, Chief Investment Officer, Ashika India Alfa Fund.
Pranit Arora, Co-founder & CEO of Univest pointed out that it is a widespread mistake made by most investors to book out at higher levels and miss an entry again at lower levels.
Investors need to understand that they cannot time the markets. The ideal thing to do is to stay invested at all times and book profits according to their goals. This way, there will be no FOMO (fear of missing out), no panic buying or selling, and the investment strategy remains on track, said Arora.
In the long run, they can expect good returns only if they can ride out the ups and downs over a longer period of time. So, if they are sitting on cash, it should be deployed in a value investing opportunity with a long-term goal or objective in mind, Arora added.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.