Additionally, an increase in foreign investment inflows, a drop in US bond yields, strong GDP growth and expectations of no more tariffs also helped the gains.
The benchmark Nifty jumped as much as 334.6 points to hit a new high of 20,602.50. Meanwhile, the Sensex rose 1,106.6 points to hit a record high of 68,587.82. While the Nifty also touched a new high in the previous session (December 1), the Sensex touched its peak today for the first time since September 15.
Just in the 2 sessions of December, the Indian market rose more than 2 percent.
Mid and small cap indices also hit their fresh record highs during the session. The Nifty Midcap 100 index hit its record high of 44,148.90, up 1.7 percent in intraday deals, while the Nifty Smallcap 100 index scaled its fresh peak of 14,514.90, up 2 percent in intraday deals.
“An indication of the political developments and the market reaction in 2019, the market will witness an upward momentum till the run-up to the 2024 general elections. Nifty may see the 22,000 level in the next four to five months. However, as Nifty has already rallied around 1,700 in the past one-and-a-half months, an occasional profit margin cannot be ruled out,” said Sheersham Gupta, Director and Chief Technical Analyst at Rupeezy.
Going forward, experts expect market sentiment to strengthen and the prospect of a pre-election rally is quite strong now. Motilal Oswal, in a recent report, also pointed out that Nifty had given positive returns (9-36 percent) six months into the announcement of general election results (Nov. to May) on five previous such occasions.
Equity markets were rightly worried about the outcome of state polls and what it holds for the 2024 general elections. With the result overwhelmingly in favor of the incumbent BJP, the market’s confidence in the current dispensation and political continuity after 2024 Lok Sabha elections will get acceleration This bodes well for macro and policy momentum for India, which is currently seeing the highest growth among major economies, it added.
Read here: SBI, M&M to LT: Motilal Oswal recommends 14 stocks to buy after assembly polls
“However, a hindering factor will be the valuations, which are high and will get longer as the rally gains momentum. In the short term, the market will ignore fundamentals and go up, but soon high valuations will trigger some selling,” warned VK. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
What investment strategy should investors follow? Here’s what experts say:
Manish Goel, Founder and Director of Research and Ranking
For retail investors who may feel left out, there is no need to worry. India’s long-term history is still unfolding, with many achievements awaiting us. However, it is essential to be prepared for fluctuations. Also, don’t forget that such markets will always present cases of overvaluation, which makes it difficult to find good investment opportunities. But if you can get the right advice at the right time, then the path can be very rewarding. Remember, staying alert, staying informed and maintaining a long-term investment approach will be key.
Mukesh Kochar, National Head of Wealth, AUM Capital
The investable liquidity in the market is huge and supported well to bring the Nifty to a new high. The quarterly result also showed a good set of numbers from companies and was instrumental in the current bull run. The recent GDP data surprised everyone with higher than estimated numbers clearly reflecting the current economy. Manufacturing and mining showed double-digit growth this time, which directly indicates the type of activity taking place in the economy. Manufacturing has been driving growth for several quarters, which is a structural change after a long time. Investors should keep things simple and focus on asset allocation and portfolio rebalancing.
Anirudh Garg, Partner and Head of Research at Invasset PMS
The current bullish trend ahead of national elections suggests that investors may prefer the incumbent BJP for continued stability. With India-centric themes at the fore, the market seems poised to benefit from continued dominance. This scenario underlines the importance of political stability in fostering a favorable environment for market growth and investment strategy.
Apurva Sheth, Head of Market Insights & Research, SAMCO Securities
Geopolitical risks and rising US bond yields are major concerns for global financial markets. We recommend investors limit their exposure to stocks and start increasing exposure to gold and long-term debt as we are close to peak interest rates. The allocation to gold and debt should gradually increase as we approach Lok Sabha Elections next year.
We like stocks from the auto, banking and capital goods sectors from a medium-term perspective. We would prefer stocks that trade at reasonable valuations and have good growth potential from these sectors. Rising energy prices can negatively affect oil and gas companies that do not have much price freedom, especially the oil marketing companies. A rising dollar and recession fears in China and the US could put metal supplies under control for the medium term.
Vinit Bolinjkar, Head of Research, Ventura Securities
We are bullish on infrastructure, pharma, FMCG (FMCG and consumer), engineering and capital goods and PSU banks. These sectors are expected to do well and outperform the broader indices.
Manish Jain, Fund Manager, Coffee Can PMS, Ambit Asset Management
We continue to maintain a weight on banks and have increased positions in autos and IT. Recently, we have become very constructive (albeit selective) about chemicals. However, there is a negligible cash position.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Updated: 04 Dec 2023, 11:42 AM IST