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How to play the market at all-time highs

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It is that time when share prices are constantly scaling new peaks. If you are an experienced trader or an investor, you know. You have been there and done that. You will look at multiple parameters and review your investments. Some wise people on the street follow thumb rules to make the most of the stock market cycles. They may not follow the day-to-day technical parameters of a resistance and a bottom. For them, if the stock price doubles from your purchase price, you must book profit—at least a part of it. The NSE Nifty 50 and the S&P BSE Sensex have more than doubled from the lows of March 2020. That means top-rung company shares are ripe for booking profits if you need the money. If you are a long-term investor, you will probably wait for a correction to invest more.

However, if you are new to investing, you may wonder when to enter the market. There are several factors to consider before you decide to go with the flow.


Most pundits expect the Nifty forward price-earnings multiple to hover around 20 times or less, even at the current peak. That makes the index relatively less expensive than when it hit an all-time high. That is primarily driven by the steady profit growth of companies and an average 13-14% earnings per share growth in the top-run companies. The mid-cap and small-cap shares have rallied significantly, reflected in over 35% gains in indices that track these companies. You may want to focus on individual stocks and identify companies with sound fundamentals and still trade at a relatively lower valuation.

Inflation and interest rates

The current inflation imprint for August 2023 was lower than that for July 2023. It is an encouraging sign as prices of tomatoes cooled off. The government will likely put all its financial and supply chain muscle into ensuring that prices of key food and essential items remain in a range and do not run away. That is ahead of a busy election season. That is good news for equity markets if inflation is to be kept in check. It is perhaps an excellent time to construct a long-term portfolio.

Credit growth

Another critical parameter to look at is the sectoral deployment of credit. There is a strong growth in non-food credit led by the retail loans segment. Personal loans, consumer loans, and property loans are growing at a faster clip than in previous months. There is also a significant pick up in services sector loans. These trends indicate a pick-up in domestic consumption. That is a good sign for the economy, as two-thirds of India’s economic growth comes through consumption.

You can note these parameters and create a portfolio to suit your risk profile. You may identify relatively cheaper stocks by understanding the valuation and fundamental metrics. The other option is to use technology to help you identify a basket of stocks that can get you started.

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