Investment Strategy at All-Time Highs – by Sidhavelayutham, Founder & CEO, Alice Blue

Bangalore (Karnataka) [India], October 28: September 2023 was a historic month for India in many ways. The Indian equity market hit a new milestone of 20000 mark. On the IPO front, 14 companies went public in this month, making it the month with the highest number of IPOs in 13 years. Additionally, the retail investors participation in the market rose meteorically with the demat accounts reaching nearly 13 crores. 

With the markets getting ready for making a new all-time high again, nobody knows which point in this journey will define the end of this rally. Every rally has its own unique situations/factors due to which the market goes up or down. India hosted the first G20 summit in September this year. Later, JP Morgan announced that Indian Government bonds will be included in its emerging bond index. Analysts expect that this inclusion has the potential to bring in nearly $26 billion of passive inflows in the country. All these factors and many more situations might have triggered a positive sentiment in the minds of the investors who took Indian markets to a new all-time high.  

The common investors at this juncture go through a lot of behavioral dilemmas. Some fear that the market will not be able to sustain this level, while others intend to play along the momentum. New investors in the market have the FOMO (Fear Of Missing Out) feeling. Hence, a strategic thought process which balances out both risk management and return objectives is the need of the hour. It is all situational and one should not panic at all. One can follow these valuable investment strategies below:         

Rebalance The Portfolio

The first strategy for an investor at this point is to rebalance his/her portfolio. With the equity market touching an all-time high, the initial target portfolio allocation of say, 60% equity and 40% debt would have now changed to 75% equity and 25% debt in value. The situation demands rebalancing of the portfolio. One should book profits in some overvalued equities (maybe small cap or midcap stocks) and get back to the target initial portfolio allocation. 

Think Long-Term

Secondly, if one plans to make fresh investment in the market, it should be based on a long-term perspective because the market can be very volatile around new life highs. Focus on accumulating those stocks which are at a lower valuation multiple in order to realize the full benefits of early entry into the stock. In fact, investors can start phase-wise investments just like SIPs for enjoying the benefit of cost averaging over a period of time.

Avoid Impulse Investment Decision 

Thirdly, one should avoid making impulse entry into the market just because it has touched new highs. A lot of momentum investors/traders often do that, however it can be really challenging for the common investor community to get out if the market goes in the reverse direction over a few months.  

Don’t Time The Market 

Finally, one key piece of advice for everyone. Do not try to forecast the top/bottom of the market. The market is far more superior than even the smartest analyst/trader/investor on the street. Hence, one should always be inclined towards investing in good and relatively undervalued stocks for the long-term.       

For more in-depth insights into investment and trading strategies, please visit www.aliceblueonline.com.

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