Markets Are Hitting an All-Time High. Is It the Right Time to Invest?

In the current stock market scenario, it is common to hear news that the stock market has hit a record high. The Indian stock market’s performance is analysed through stock market indices such as Sensex and Nifty, which track the performance of the biggest companies in India. In the recent past, especially after the market crash that happened during COVID-19, the Indian stock market has shown unprecedented growth. This immense growth has allowed stock market indices such as Sensex and Nifty to reach record-high levels. As an investor, this can come as good news, as you can book profits or buy fresh stocks to profit from the continuous stock market growth.

This blog will help you understand the current scenario of the stock market hitting all-time high and where you should invest at this time.

• The performance of the Indian stock market is analysed through the performance of stock market indices such as Sensex and Nifty.
• These stock market indices have reached record levels, with Sensex reaching 82,500 from 26,000 in just four years.
• Investors need to adjust their investment strategy as the markets may be volatile during this time.

The Indian stock market crashed in 2020 due to high uncertainty brought about by the COVID-19 pandemic. The BSE Sensex crashed to its multi-year low of 25,638.90 on March 24, 2020, and it was expected that it would take over a decade for the Sensex to stabilise. Fast-forward to now: The BSE Sensex hit a record high of 82,559.84 in September 2024, just four years after hitting a record low. The high growth is owed to extremely positive investor sentiments, where more investors are entering the stock market and making fresh investments. A majority of the demat accounts are active and contribute highly to the trading volumes.

Furthermore, foreign institutional investors are contributing heavily to stock market growth. In the first two weeks of August, they invested Rs. 2,196 crore in consumer service companies, Rs. 3,462 crore in healthcare stocks, and Rs. 1,785 crore in FMCG. The increased and continuous investments, with the stock market indices hitting fresh highs every week, potentially indicate that the markets still have growth potential.

The Indian market capitalisation to GDP ratio has drastically increased to 140.2 per cent as of May 2024, compared to 95.8 per cent in March 2023, which is a good sign for investors as this means that the market cap of listed companies is increasing by a hefty margin. Here is where you can consider investing to utilise the stock market growth:

Balanced funds

Balanced funds are mutual funds that invest in both equities (stocks) and debt (bonds), providing a mix of growth and income. If you have a moderate risk appetite, you can choose balanced funds as they can help you balance risk and return, offering potential capital appreciation from stocks while generating stable income from bonds.

Large-cap schemes

Large-cap schemes invest in stocks with high market capitalisation that are generally included in various stock market indices, mostly the top 100 companies. These schemes are ideal for investors who have a low-risk appetite but want to earn steady returns, mostly through constant dividends.

Debt funds

Debt funds are mutual funds that invest in fixed-income securities like bonds, government securities, corporate debt, and money market instruments. These funds are considered the safest and provide steady returns with lower risk than equity funds, making them suitable for investors seeking income over capital appreciation. You can start an SIP for a disciplined approach.

The Indian stock market has shown immense growth, especially from the lows during 2020. It is currently hitting all-time highs almost every week, fueled by positive investor sentiments and investments from foreign institutional investors. However, as the market might be volatile at this time, it is important to approach investments after considering various types of investments and investment strategies. One of the best ways is to identify investments based on your investment goals, risk appetite and time horizon and keep monitoring the latest stock market trends.