Sensex close to 80,000: Should you book profits or hold your mutual fund investments?
With the benchmark index
Sensex
reaching the 80,000 level, the market expert recommends that while the rally has been broad-based and swift, the market doesn't appear irrationally exuberant yet.
'With earnings season underway and key large caps delivering, the momentum may continue in the near term. However, given the sharp rise in a short span, some moderation or consolidation is possible. Booking partial profits or rebalancing to maintain asset allocation discipline makes sense. That said, India remains a structural growth story, and long-term investors could still benefit from staying invested — especially if they are diversified across sectors and market caps,' Sagar Shinde, VP of Research at Fisdom, recommends.
Another expert asks investors to understand why they are booking in the first place, whether this is a part of an annual rebalancing strategy or is it just to capture short-term gains, and if it is the latter, then there is no strategy behind the exits, which can be quite dangerous.
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'Therefore, investors should build a strategy instead of thinking from a short-term outlook or focusing solely on booking profits or capturing upside potential. One should build a long-term investment strategy and stay invested,' recommended
Chethan Shenoy
, Director & Head - Product & Research, Anand Rathi Wealth Limited
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'Maintain an asset allocation of 80% equity and 20% debt for long-term wealth generation. Diversify across sectors and market caps: Large (55%), Mid (23%), Small (22%). Continue SIPs to benefit from rupee cost averaging and market dips. Review and rebalance your portfolio regularly to maintain the target asset allocation. Base investment decisions on research, not market noise,' he added.
Benchmark
index
- BSE Sensex - touched its all-time high level on September 27, 2024. It touched a level of 85,978.25. Now with the benchmark reaching a level of 80,000, Shinde recommends that investors can focus on large-cap and flexi-cap funds, which are benefiting from leadership in banking, capital goods, telecom, and consumption themes and since large caps are driving this phase of the rally, pure large-cap funds are relatively safer while still offering upside.
'Additionally, banking & PSU funds, infrastructure funds, and power/energy sector funds could be looked at selectively, given the sector-wise strength visible in the data. For those seeking a balanced risk-reward, hybrid equity funds,
multi-asset funds
can also be considered for smooth returns across market phases,' Shinde further recommends.
Shenoy recommends diversification across categories as that will allow them to generate alpha while taking advantage of active management.
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'Investors should diversify across different categories of
mutual funds
— including large cap, mid cap, small cap, flexi cap and multi-cap categories. This will allow you to generate alpha while taking advantage of the active management,' he recommended.
BSE Sensex on Monday gained 855.30 points or 1.09% to close at 79,408.50, while the broader Nifty 50 index closed at 24,125.55, higher by 273.90 points or 1.15%. India's benchmark indices extended their winning streak to five sessions on Monday.
In the last six months, the benchmark index has gone down by 3.28%. In the last one and three months, the index gained 2.88% and 1.91% respectively.
Shinde attributes this surge to strong performance in banking, financials, and power stocks and he added that data shows that names like IndusInd Bank (+17.35%), Power Grid (+15.52%),
Axis Bank
(+15.30%), Bharti Airtel, and ICICI Bank have shown sharp up moves over the past month.
'A combination of robust earnings expectations, FII inflows, improving macros (inflation cooling, policy stability), and global tailwinds (such as the softer dollar and Fed pause hopes) have all contributed. The financial sector, particularly private banks and NBFCs, continues to exhibit earnings resilience and strong credit growth, suggesting potential sustainability. The power and telecom sectors are also gaining on structural tailwinds and capex cycles,' Shinde adds.
By the time President Trump announced a reciprocal tariff policy, the BSE Sensex had gained 2.53%. Shenoy believes that India's macro fundamentals are strong, and market valuations are quite fair, inflation and fiscal deficit are under control, and earnings growth, which was sluggish in the first half of the year, is expected to pick up — as evident from Q3 and Q4 numbers going forward.
He further shared data on how the Indian market and international market have performed since the tariff announcement date, which shows that Nifty 50 has gone up by 4.02%, whereas international indices such as S&P 500,
Shanghai Composite
, Hang Seng, and Nikkei 225 have lost between 1.98% to 13.61%.
'India is the least affected country by the reciprocal tariff policy of the US, especially when we look at the returns side by side. Only Indian markets have shown positive returns among major global indices. Even under global pressure, Nifty has managed better downside protection,' Shenoy added.
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After seeing the negative performance by the index in the last six months and now the index witnessing a minimal surge of 0.53% in the current calendar year and about to reach all-time level, Shenoy recommends that this is a good time to enter the market and one who has lumpsum amount to invest can stagger the investment over three to four weeks and in case if one is investing through SIPs, they can continue with the same.
Shinde also shares a similar opinion. He recommends that, given the market is at record highs, SIP remains the preferred route for fresh allocations — it helps mitigate timing risk and allows rupee-cost averaging.
'For those sitting on idle capital and a high-risk appetite, staggered lump-sum investments (STP or tranches) into equity funds over the next few months could be a smart middle path. Even for those who missed the rally, it's not too late to enter, as India's fundamentals remain intact, and the structural growth opportunity is long-term. But entering with a disciplined approach (via SIP or STP) is crucial to avoid emotional reactions to any short-term corrections,' he further recommends.
One should always invest based on their risk appetite, investment horizon, and goals.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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