Indian stock market: With the Nifty 50 surpassing the 25,000 mark for the first time, hitting a fresh all-time high of 25,078.30 in morning trade on Thursday, August 1, the benchmark index has gained about 15 per cent this year so far. Experts say this rally is not showing signs of stopping here.
Rohit Srivastava, the founder of Indiacharts.com, believes the Nifty 50 could touch 29,000 by the end of this year. This would be another 16 per cent gain for the index this year. In this case, the Nifty 50 will have overall risen over 33 per cent in 2024.
"I am looking at a year-end level closer to 29,000 on the Nifty 50 as the rally is likely to go on with some corrections in between," said Srivastava.
"Many stocks that were consolidating over the last 12-18 months are now showing positive momentum on weekly and monthly charts; so, participation is widening to other parts of the market," Srivastava observed.
Indian stock market benchmarks have been hitting fresh highs in the recent past primarily due to strong retail participation despite valuation concerns.
According to the Association of Mutual Funds in India (AMFI) data, inflows into equity mutual funds jumped 17 per cent month-on-month to ₹40,608 crore in June against ₹34,697 crore in May. Contribution via systematic investment plans (SIPs) touched ₹21,262 crore as compared to ₹20,904 crore in May.
Retail investors still look for undervalued stocks across segments even as concerns over valuations have been mounting.
"Only a segment of midcaps have gone overboard. One reason is that there is a limited list of midcaps in which mutual funds can invest. So, record equity inflows into mutual funds have resulted in valuations going overboard in that segment. The entire midcap or small-cap space is not overvalued," said Srivastava.
Srivastava argues investors need to focus on value and growth arguments.
"There are stocks that are undervalued, but will they grow? Some stocks are overvalued, but are they growing? In the end, the market discounts growth, so unless there is a growth slowdown, staying invested or investing in low-hanging fruit can still pay off as the economy continues to grow," said Srivastava.
"Look for momentum cycles in stocks that are turning positive at a monthly degree and valuations that have come down during this time. This would have a good risk-reward in favour of investors," Srivastava said.
As the US Fed has signalled rate cuts could occur in September, bond yields have fallen. Experts say the rate-sensitive sectors look attractive at this juncture.
"Interest rate-sensitive sectors should move meaningfully higher because bond yields are going to slowly come down globally. This means auto, metals, realty, banking, financial services, and infrastructure should do well," Srivastava said.
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