With the December quarter earnings over now with better-than-expected results and amid a lack of more direct cues, investors are now focussed on the upcoming 2024 general elections. Investors are positive since the polls and the voter sentiment suggest the comeback of the incumbent government in the next elections.

While experts do believe that markets will hit more new peaks as we approach the elections and the RBI gets ready to cut rates in the second half of this year, what should be your trading strategy in this record-high environment? How should your portfolio look like? Here’s what experts said:

Tanvi Kanchan, Head – UAE Business & Strategy, Anand Rathi Shares and Stock Brokers

For investors looking at the long-term perspective, short-term volatility can be used to increase exposure in sectors that are lower than long-term averages, as well as increasing large-cap exposure in the portfolio. An allocation between equity and debt as per tenor and risk profile can be maintained in the range of 60% – 70% in equity and balance in debt for an aggressive investor.

Deepak Jasani, Head of Retail Research, HDFC Securities

Investors would do well to keep rebalancing their asset allocation and equity portfolio to realise profits from the equity portion (if it has overshot the allocated percent). Within equities, stocks that have run up much ahead of their fundamentals and peers should be looked at from a full/partial exit perspective. With elections around the corner, we are entering a volatile period. Hence the above will insulate the portfolio from sudden large shocks and at the same time enable participating in the market upmove as and when it happens.

Neeraj Chadawar, Head – Fundamental and Quantitative Research, Axis Securities.

We believe style and sector rotation will be critical in alpha generation moving forward. With the intense catch-up of Mid Caps and Small Caps in the last couple of months, we believe the margin of safety at current levels has reduced as compared to that available in Large Caps in terms of valuations. With this view, the broader market may see some time correction in certain pockets in the near term and flows will likely shift to l large caps. However, the long-term story of the broader market continues to remain attractive. In this context, the theme ‘Growth at a Reasonable Price’ and Quality themes look attractive at the current juncture. Hence, we recommend investors remain invested in the market and maintain good liquidity (10%) to use any dips in a phased manner and build a position in high-quality companies (where the earnings visibility is relatively high) with an investment horizon of 12-18 months.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services

The market is likely to remain resilient amidst volatility. Valuations are excessive in the broader market. A safe investment strategy is to focus on high-quality large caps.

An important characteristic of the bull market is its ability to set new successive record highs. And this market has been doing this consistently. This year alone Nifty has set 6 new record highs (intraday) and this is indicative of the strong momentum in the market. Selling by FIIs, triggered by rising bond yields in the US, is having no impact on this up-trending market where DIIs (bought ₹17850 crores in February so far) and domestic HNIs and retail investors are calling the shots.

High quality fundamentally strong large caps like RIL, ICICI Bank and Bharti taking up the leadership in the rally is positive for the bulls. Also, it is important to remember that large caps have valuation comfort in this market where segments of the broader markets have tipped into frothy valuations. Since the Bank Nifty is around 4% away from its record high, more action is likely in banking stocks.

In the near-term volatility will be high. Sharp corrections can happen at any time.”

Apurva Sheth, Head of Markets Perspectives & Research, SAMCO Securities

Indian markets are likely to trade range bound for the next few days and Nifty may move from 21,500 to 22,200. A clear trend will emerge only after the market breaks out on either side of this range. One can maintain a stock-specific approach and pick stocks that have delivered good quarterly numbers in the current earnings season. Contrarian investors can look for opportunities in private banking stocks that have not participated in the rally so far.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 20 Feb 2024, 02:19 PM IST