Nifty at 20,000: What lies ahead? A look at different investment strategies experts suggest now

Indian benchmark index Nifty scaled the record 20,000 mark for the first time on Monday, September 11, on the back of robust buying by domestic investors and foreign investors and a successful G20 summit, which has drawn the attention of global investors towards the Indian markets.

In today's deals as well, the benchmark Nifty remained above the 20k mark and hit a new high of 20,110.35, extending gains for the eighth straight session.

Sensex also surpassed the 67,000 mark but is yet to breach its previous record high of 67,619.17, hit on July 20, 2023. It is less than half a percent away from its previous peak.

"Nifty also cheered the huge success of the G20 summit by crossing the 20k mark during the day, as it would help India emerge as a superpower and would strengthen its position in the global arena. Various successful deals were struck at the summit including in the field of railways, shipping, biofuel and power transmission among others which would help India build up its global position. The domestic economy would be the major beneficiary of the China+1 strategy as MNCs look to diversify their production and sourcing activities away from China. This apart, the various robust macroeconomic data points indicate the resilience of the economy and strengthen the narrative of India being the fastest-growing economy in the world. The strong momentum in the market is likely to continue as the upbeat economy would keep the earnings growth trajectory strong," said Ajay Menon, MD & CEO, Broking & Distribution, MOFSL.

Rahul Sharma, Director, Head- Technical & Derivative Research, JM Financial Services, expects Nifty to hit 20,432 this month and 21,000 by Diwali.

So what strategy should you follow in this bull run?

Pranav Haridasan, MD & CEO, Axis Securities

Nifty crossed 20K, a move of more than 12-13 percent of this fiscal year. Unlike earlier moves, this rally is broad-based with constant sector rotation. In the current rally, we have witnessed significant outperformance from small and mid-cap names compared to a large-cap index like Nifty50. At this juncture, we believe it will be prudent for investors to take some risk off the table and shift from higher beta stocks to large caps and defensives. Amongst the small and mid-cap universe, we recommend investors stick to companies with a proven track record of generating wealth for investors through prudent capital allocation and efficient business operations.

Shantanu Bhargava, Managing Director, Head of Discretionary Investment Services, Waterfield Advisors

In times like these, as an investor, one must take a step back and evaluate their intended decisions through the lens of "investing" versus "speculating". Never speculate with core capital. Recognising speculation from investment can be crucial to investing success in these situations. Finally, all performance-chasing - selling a fund that has trailed over the last three years to pick up one that has outperformed - is speculating rather than investing. It's time to be disciplined and stick to your plan.

Parth Nyati, Founder at Tradingo

Since the low 16,828 of March 23, Nifty has surged by 18 percent, which was fuelled by DII’s inflow of ₹34,000 crore during this period. Meanwhile, the mid-and small-cap indices have seen an even more substantial rally, each rising by about 41 percent and 47 percent respectively.

However, despite this significant rally and increasing values of local stocks, there are concerns due to weaknesses in the global market. These problems are driven by a strong US dollar and rising US bond yields. Last week, the number of people in the US filing for unemployment benefits was lower than expected, which has raised worries about the possibility of interest rates going up. Additionally, China's trade balance data is showing weakness, which is making the US dollar even stronger.

As our PM said, this is India’s Amritkal, so medium- to long-term opportunities in the Indian stock market will be fabulous. Any correction due to global factors will be a good buying opportunity in sectors like auto, banking, PSUs, IT, etc.

Technical View

Parth Nyati, Founder at Tradingo

Technically, the Nifty is continuing strong bullish momentum, where 20,100 and 20,150 are resistance levels. 19,850–19,720 is an immediate demand zone, while the 50-DMA of 19,500 is a key support level. The bullish momentum will continue until the Nifty closes near the day's low. Bank Nifty witnessed a breakout of the 45,000 resistance mark, where 45,700 is an immediate resistance zone. Above 45,700, we can expect a move towards the 46,300 level. On the downside, 45,000 is an immediate support level, while 44,800 is a key support level.

Rupak De, Senior Technical analyst at LKP Securities

Bulls continue to lead the way as the benchmark index surged to a historic high, breaching the 20,000 mark for the very first time. This impressive rally followed a breakout from a descending channel that occurred last week. Looking ahead, 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.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

Nifty crossed the psychologically important mark of 20,000 points. With a breach of this important resistance level, we believe that the next target to look forward to in Nifty is 21,500 which is 3,000 points from the main breakout level of 18,500. Despite the markets hitting new all-time highs, the valuations are still reasonable. Nifty’s trailing twelve months PE is at 22.39 which is slightly above its long-term median of 20.62. Thus, Nifty has enough room for further expansion, especially given that we are entering an election year.

However, one must note that the sectors that pushed the Nifty up to 20,000 may not be the same which will push it to 21,500. Nifty may have hit an all-time high but not all the sectoral indices have followed it. Take Nifty IT for example. It is still trading more than 17 percent below its all-time highs. If markets were to move significantly above current levels, then it cannot happen without a heavyweight sector like IT being left behind. Bank Nifty is also trading at a relatively cheap valuation. Thus, banks and IT could be the sectors that may take the index higher from the current level.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.