On Tuesday, sensex opened the session above the 75k mark – at 75,124 points – also its new all-time peak, but some profit-taking at those levels pulled it down to close at 74,684, down 59 points on the day.On NSE, Nifty, too, scaled a new life-time peak at 22,768 points during early trades but closed at 22,643, down 24 points.
The slide was partially owing to investors’ nervousness about expected US inflation data due Wednesday, more so after recent high-employment data released last week, said Vinod Nair, head of research, Geojit Financial Services. An uptick in US inflation reading could delay rate cuts by its central bank and put global investors on the backfoot.
For sensex, the 75k milestone came a day after BSE went past a major landmark – scaling the Rs 400-lakh-crore market capitalisation. In the last 10 years, since Modi-led NDA govt came to office, investors’ wealth, measured by BSE’s market cap, has gone up by five times.
75,000? ‘Don’t be scared by levels. It is never late’
As markets reach new highs, there are investors who feel they have missed the opportunity to create wealth.
Don’t feel left out, say investment advisers. “There’s no reason to get intimidated by the levels of the (indices),” said Hemant Rustagi, CEO, Wiseinvest Advisors.
Irrespective of the level at which the leading indices are, they should allocate funds mainly into three asset classes — equity, debt and gold — and give those assets the time to grow, advisers say. “To create wealth, one should focus on three things which are in one’s control: The time horizon of investment, asset allocation which is in conformity with the person’s return-volatility appetite and investing in good quality assets,” said Vineet Nanda, MD, Sift Capital, a Delhi-based financial advisory & wealth management firm.
Financial advisers always insist on the process of asset allocation for every investor. Only the composition of the assets in the portfolio could defer depending upon age. Also, they say that it’s not ‘the timing of the market’ that’s important for wealth creation, instead it’s ‘the time in the market’ that’s important.
According to Nanda, in the current market scenario, large-cap stocks and debt are a better bet like gold. A change in the interest rate cycle, through cuts in rates, is sure to generate profits for investors in these assets, he said. Large caps, on the other hand, although reasonably valued are less risky options compared to small and mid-cap, which are adequately priced in and currently look risky bets.
A similar approach could be taken by investors who prefer the MF route. They could invest in large, multi and flexi-cap schemes and avoid mid, small-cap and sectoral funds.