Nifty Hits Record High; What’s Your Game Plan?

Nifty Hit Record High

Nifty recently hit its all-time high level of 9300. It's the time investors look forward to. It's a festive time for those investors who have toiled in the search of good stocks and have invested in them for a long period of time.

As the market goes upper and upper, undoubtedly it brings a wide grin on the faces of investors, but there are certain things which one needs to be careful of when the market is high.

Yes, You Read It Right!

Like in the downturn, in high market investors need to have a strategy to reap the maximum benefit of the market situation. The historic data suggests a correction is always on the heels of a bull market. So is the correction around the corner? It might, but the immediate question that you need to ask yourself is - do you have a plan for the bull market?

Things To Do In The Market's Bull Run

If you have been following a coherent, well-thought-out investment or trading plan, it is a given that you bought stocks at the right price when the market was down. Now the natural next step to that plan is to identify the stocks which have reached their targets and exit at the right price. Easy-peasy, isn't it?

Alas, if it would have been so simple everyone would have made millions in stock investment. Unfortunately, it isn't.

Stock Is Up, But Is It The Right Price To Exit?

When the market takes an upswing, it is very likely that along with the market most of the stocks in your portfolio will start their upward trend, but would it be a smart idea to sell these stocks just because they are in profit? Every stock has its growth potential - short-term, long-term - and your exit call should be in sync with the potential of the stock. On many occasions, investors get too overwhelmed by the market euphoria to think rationally. In the heat of the moment, they sell some good stocks for a nominal profit which could have multiplied their value manifolds in the future.

Let's try to understand this point through an example. Imagine you had bought stocks of ABC Pvt. Ltd. for Rs.250. In six months Nifty hits its all time high and ABC Pvt. Ltd. grows by whopping 60%. Now the question staring at you would be - whether to sell or hold ABC Pvt. Ltd.? At such junctures, it always pays to think about the fundamentals of the stock, for that's the earmark to identify the potential of the stock. If the fundamentals are strong and there is a possibility of more growth then hold, and if it has run its course, sell it.

The market, whether up or down, tests the nerve of the investor. Only those who have good emotional balance emerge triumphant from such challenging situations.

Don't Believe Those "Don't Buy When Market Is High" Calls

The general idea is to buy when the market is down and sell when the market is up. In a way, it is true, but like everything else, there are exceptions to this rule too. The reason market index accelerates is because most of the companies and the sectors are in the green. However, if you have a long-term perspective, there are plenty of stocks which you will find are trading the higher low level and have the potential to go higher from that level. These stocks can be identified with the aid of technical analysis, as they come in handy to ascertain patterns which drop distinct hints of the future course of the stock.

Many investors, due to lack of awareness, miss out on good stocks deals. The moment the markets hits high, the financial media turns into a band of cheerleaders and creates such frenzy about the situation that it becomes blinkers on your eyes. They only talk about the popular stocks which are rallying on that day. On the other hand, there are several undervalued stocks with rock-solid fundamentals available in the buying range.

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