Sensex @ 60,000: Time to rejig portfolio and buy the dips, say analysts

The 30-share Sensex index scripted history on Friday as it breached the 60,000 mark for the first time. The BSE barometer hit an all-time high of 60,333 and took just 91 sessions to climb the latest 10,000-points rally. It had hit the 50,000-mark for the first time on May 18, 2021.

While expensive valuations and a cautious global mood given the developments in China and the possibility of a third Covid wave may trigger mild profit booking in days ahead, most analysts remain optimistic and suggest a market correction, if any, should be bought into from a medium-to-long term perspective.

“Over the next few years, one can get 12 – 15 per cent compounded return form the market. Frontline indexes can double from the current levels over the next five years. A 10 – 15 per cent correction can happen at the index level in the short-term, but such corrections are par for the course. In the last 20 years, only in two calendar years we did not have a 10 per cent correction. A prudent strategy will be to buy the dips rather than sell stocks on a rise,” suggests Jyotivardhan Jaipuria, founder & managing director, Valentis Advisors.

Thus far in calendar year 2021, the S&P BSE Sensex has rallied over 25 per cent. Among Sensex stocks, Bajaj Finserv, Tata Steel, State Bank of India (SBI) and Tech Mahindra have been the top gainers that have moved up 56 per cent to 108 per cent during this period, ACE Equity data show.

Despite the sharp rally thus far in 2021, Gaurang Shah, senior vice-president at Geojit Financial Services, too, expects the market correction, if any, to be short-lived. Investors with high risk appetite, he says, must stay invested while risk averse-investors can consider profit booking. Market returns, he says, are likely to be polarised with stocks of companies doing well operationally and financially getting rewarded at the bourses.

“Sensex hitting 60,000 is just the start of a strong bull-run in the Indian markets. People must accept the fact that high stock market returns are a possibility in India now. Developments in China are already discounted. Asset allocation should depend on risk appetite, time of horizon of investment, and return expectations. Buying anything and everything now will not generate returns,” he says.

Sectorally, the S&P BSE Metal and S&P BSE Realty indices have gained the most – up nearly 75 per cent and 59 per cent on a CYTD basis. Auto, bank and healthcare indices on the BSE, on the other hand, have gained the least – between 12 per cent and 23 per cent thus far in CY21, ACE Equity data show.

 

Rupen Rajguru, head of equity, investments & strategy at Julius Baer expects markets to remain volatile in the near-term as market participants dissect India Inc’s September quarter earnings, monitor central bank (Reserve Bank of India and the US Fed) policies and other events. From a two – three year perspective, he remains constructive on Indian equities on strong economic rebound and better-than-expected corporate earnings.

“Considering high valuations in some pockets, investors should take this opportunity to re-balance their portfolio. If the skew towards equity has gone up by sheer market appreciation, then investors can book profit. Among sectors, we are positive on financial services space, revival themes like construction, capital goods, cement and engineering. We continue to like the information technology (IT) and healthcare sectors. Remain underweight on consumer staples since the sector looks pricey at the moment; expect a mean reversal in the automobile space,” Rajguru said.