Sensex, Nifty at new peaks: Should you stay put or book profits?

Now that Nifty has hit a summit and breached 22,000 levels very conveniently and the market is seeing immense exuberance and curiosity at the same time, here’s how market experts view the current market landscape and suggest one should navigate the market ahead.

Book profits:

Prashanth Tapse, Sr. VP Research Analyst at Mehta Equities, suggests booking profit in this one-way rally.

The expert believes the Indian stock market is ignoring two major headwinds: inflation and a slump in industrial output.

Inflation in December hit a new four-month high of 5.69 per cent. Further, food inflation has inched higher to 9.53 per cent in December 2023. Amidst a rising inflation backdrop, the RBI is likely to keep its repo rate and policy stance unchanged in its February policy.

Secondly, industrial output slumped to an eight-month low of 2.4 per cent in November.

So, amid this backdrop, the expert suggests booking profits is the next big thing traders should focus on in the current one-sided rally. Further, looking at the technicals, he suggests profit booking can come in the 22,200–22,300 zone. He is of the view that the Nifty’s bias remains positive entering the overbought zone with immediate upside targets at the 22,300 mark, and the line in the sand is at the Nifty’s make-or-break support at the 21,707 mark.

Remain invested with caution:

Narendra Solanki, Head of Fundamental Research and Investment Services at Anand Rathi Shares and Stock Brokers advises investors to remain invested with caution.

Though the market sentiment is positive, the broader valuations are not cheap, especially in mid and small-cap baskets. “We are also just early into the results season, and this would provide much-needed clarity on growth and profitability. Remain invested with caution, and stock-specific opportunities should continue to emerge,” advises the expert.

Echoing a similar view, Paras Matalia, Fund Manager, SAMCO Mutual Fund, also suggests that investors should ride this bull market till it lasts while keeping a very close eye on the markets for weaknesses. “On Monday, markets opened at new lifetime highs, marking the second new lifetime high in just 15 days of the calendar year 2024,” remarked the expert.

Book partial profits with reasonable cash cushion:

Omkar Kamtekar, Research Analyst, Bonanza Portfolio, advises to partially book profits and also maintain a reasonable cash cushion to cash in on any opportunities in the market.

The expert noted that it is important to understand the current state to safeguard against volatility. He mentions that any negative announcement in the interim budget and the subsequent MPC meeting may result in aggressive corrections.

“We expect there could be some policy announcement regarding the improvement of logistics infrastructure, which would support export-facing businesses. Immediately after the interim budget, the MPC of the RBI would meet to deliberate the policy rate decision,” opined the expert.