Momentum Plays! 13 stocks hit fresh record highs; time to buy or wait for a dip?

Indian market witnessed a knee-jerk reaction on Tuesday morning tracking muted global cues but about 13 stocks on the BSE in Group A hit fresh record highs.  

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The S&P BSE Sensex reversed gains after hitting 59000 on Friday, while Nifty50 took support near 17500 levels.  

Investors are increasingly looking to invest in stocks that are displaying momentum. Some of the stocks which rose to fresh record highs despite muted trend seen in the benchmark indices include names like Apollo Pipes, Coforge, KEI Industries, MindTree, OFSS, and Tata Elxsi, etc. among others.  

There are 9 stocks that hit a fresh 5-year high that include names like GHCL, Bajaj Electricals, Sundaram Fasteners, Persistent Systems, SRF, and APL Apollo Tubes, etc. among others.   

Experts advise investors to stay cautious while chasing momentum and pick only those stocks that fit their risk profile. It is important to understand the fundamentals of the company before making investment decisions, especially when investors are chasing momentum, caution experts.  

“Momentum investing has recently gained popularity among investors due to the phenomenal rise in stocks in the last one and a half years. However, it’s important to have the exit plan in place when we chase stocks which are trading at their record highs,” Ajit Mishra, VP - Research, Religare Broking Ltd, said.  

“Besides, investors should also know why they’re paying a premium to those businesses and be realistic with their return expectations. It’s prudent to book profits once we see any indication of loss in momentum or stocks test the expected returns,” he said. 

What should investors do? 

Experts advise investors to tread with caution and avoid any excessive leverage in the stocks. Medium- and long-term investors can wait for a dip to buy the stocks at attractive levels.    

“The strategy might vary from participant to participant based on their risk appetite. This is because we had a very long rally at a stretch and a possibility of healthy correction at any given point of time cannot be ruled out,” Mehul Kothari, AVP – Technical Research at AnandRathi, said.  

“This might irk the short-term traders. While for a considerably medium to long term investors, they might wait for dips to add positions since the broader structure remains strong,” he said.   

Kothari further added that short-term investors should adhere to their risk management while going fresh longs in the above-mentioned stocks.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)