Nifty, Sensex hit all-time highs; should you rejig your portfolio?

Market hits all-time high: The Nifty50 finally broke the hurdle and scaled an all-time peak of 19,011.25 during the session on Wednesday, June 28. The S&P BSE Sensex also hit a fresh all-time high of 64,050.44. Both indices settled at fresh closing peaks. The previous high of Nifty50 was 18,887.60, touched on December 1, 2022. Its previous all-time closing high was 18,856.85, touched on June 21, 2023. The Nifty Bank index, too, hit a record high during the day.

Top 5 gainers from December 1, 2022, till now

• ITC Ltd. +31%
• Tata Motors +30%
• Bajaj Auto +25%
• Britannia Ind +14.6%
• Ultratech Cement +14.60%

Top 5 losers from December 1, 2022, till now

• Adani Ent -36%
• Infosys Ind -22%
• Adani Port -16%
• UPL -11%
• Cipla -11%

Broader Indices: Returns from December 1, 2022

• Nifty Smallcap +7%
• Nifty Midcap +9%
• Nifty 500 +1%
• Nifty Bank +2%

Sector gainers: Returns from December 1, 2022

• FMCG +16%
• Realty +13%
• Auto +12%
• Consumption +4.55%
• Banks +2%

Sector Losers: Returns from December 1, 2022

• Oil -9%
• IT -8.20%

"Indian markets are witnessing a broad-based rally. The percentage of stocks above the 200-DMA reached above 75 per cent in the current rally, which was higher than the reading of 68 per cent in December 2022, when an all-time high of 18,887 was registered, suggesting strong breadth in the current rally, which started in April 2023," said Devarsh Vakil, Deputy Head, Retail Research, HDFC Securities.

As Nifty scales record high, Anil Singhvi explains what makes the milestone unique

On the market outlook, A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC, said that the buoyancy in the domestic market will continue backed by inflows. A host of other factors, too, are at play. For instance, Consumer spending is on the rise, especially in travel and tourism, and credit growth continues to remain robust, backed by growth in consumer lending and personal loans.

Besides, the manufacturing sector is gaining traction, backed by the government's PLI scheme. Further, inflation, forex reserves, and interest rates are in comfortable positions, backed by lower to stable commodity prices.

Strategy and high-conviction picks

"We struggle to find ideas in the consumption, investment, and outsourcing sectors after the sharp run-up in several of our favourite sectors and stocks in the past two months. The BFSI sector is the only sector that offers value, although even insurance stocks have rallied in the past few days," said Kotak Securities in its report released on June 27.

The brokerage has made the following changes:

Changes to large-cap and mid-cap portfolios

• Kotak Securities has reduced its weight on certain consumer sector stocks after the strong recent performance of Britannia (-40 bps to 150 bps), Godrej Consumer Products (-20 bps to 150 bps) and Titan (-30 bps to 200 bps). BRIT, GCPL, and TTAN have rallied 14%, 6%, and 13% over the past two months and trade around our 12-month fair values of Rs 4,950, Rs 1,100, and Rs 2,970, respectively. "We trim positions in banks (-30 bps for AXSB to 750 bps) and NBFCs (-30 bps to 150 bps)," it said.
• "We add InterGlobe Aviation (150 bps) to our recommended large-cap model portfolio. InterGlobe (Indigo) offers a 22% upside to our 12-month fair value of Rs 3,000. The stock trades at 13X FY2024E and FY2025E EPS, although we would like to clarify that its earnings can be quite volatile based on several exogenous factors. For now, we draw comfort from (1) a rational domestic market structure (consolidating in favour of Indigo) and (2) muted global oil prices."
• "We drop Narayana Hrudayalaya (NARH) from our recommended mid-cap portfolio, given the stock is trading well above the 12-month fair value of Rs 905. We continue to like NARH’s fundamentals but note its stiff valuations, flat earnings, and modest EBITDA growth over FY2023–25E. NARH has been in the mid-cap. portfolio since June 2019."

Meanwhile, Prabhudas Lilladher remains overweight on Auto, Banks, IT services, capital goods, and Healthcare. They are underweight on Metals, Cement, Consumer, Oil & gas, and Diversified Financials. "Our Model portfolio has outperformed NIFTY by 835 bps since inception and by 133 bps in the past two months, the brokerage said in its report dated June 15.

High-Conviction Picks

The brokerage has revised its high-conviction picks list post-recent run-up. It has added HDFC Bank, Maruti, Siemens, Sumitomo Chemicals, Apar Industries, and Aster DM Health to the conviction list. On the other hand, it has removed ABB, Apollo Hospitals, Bank of Baroda, BEL, Bharti, Havells, M&M, PI Industries, and Max Health. "Many of these are due to recent run-ups, and we are not negative on these names," it added.