As the bull run continues, it is time to exercise caution, say experts (2024)

As bullscontinue their run onDalal Street, retail investors have more reasons to cheer than one. Sceptics may say that the music may stop anytime, but the optimists argue that it is hard to stop dancing when the music is still on. Both benchmark indices have hit theirlifetime highs in quick succession on numerous occasions in the past couple of months.

Consequently, benchmark indices have posted double-digit returns until Dec 22. BSE Sensex 30 spiked 16 percent between Jan 2 to Dec 22 when the market closed at 71,107. Nifty 50, too, demonstrated equally good performance and rose 17 percent until Dec 22 upon settling at 18,197.

As an investor, one might wonder if this bull run is sustainable, and if not – when exactly will the ‘party’ be finally over.

Here we delve deep into this and explore what exactly should investors be doing amid this ongoing bull run.

IndicesJan 2Dec 22Increase (%)
BSE Sensex 61,16871,10716
Nifty5018,19721,34917

Profit-booking

One expert opines that investors can explore the option ofbooking profit if a bull run has led to a higher value of equity far beyond the predetermined ratio.

Let us suppose an investor ‘X’ aimed to keep the equity portion of his portfolio under 60 percent. As a result of the bull run, if the equity portion has now surpassed 75 percent of his portfolio, then it is recommended to redeem 15 percent of the portfolio in order to do the rebalancing.

“Investors can book profit if the asset allocation is skewed towards equity. By doing the profit booking, one can do the rebalancing," says Amol Joshi, founder of Plan Rupee Investment Services.

“Another scenario of booking profit could arise when your expectation from that particular investment has already been met. And if someone wants to make a fresh investment, one can do so in the hybrid funds in the next six to eight months via STP (systematic transfer plan)," he adds.

Exercise caution

Another point worth noting is that amid the bull run, small cap funds tend to grow even faster, making the portfolio more vulnerable to volatility.

Deepesh Raghaw, a Sebi-registered investment adviser, says, “Markets have done pretty well of late, and whenever that happens, small caps perform even better than the benchmark index. This trend may continue but we don’t know for sure. So, it is recommended to make some room for contingency. We should check what risky stocks are there in the portfolio and exit them in favour of either large caps or debt funds."

“It is better to check the portfolio and if it’s highly skewed in favour of risky assets, then it is recommended to reduce the allocation," he adds.

Regardless, the generic financial advice of keeping calm rather than getting carried away with market euphoria always comes handy.

Aptly, Deepak Gagrani, Founder, Madhuban Finvest, explains, “As Indian stocks soar, it’s crucial for investors to focus on emotional intelligence and stick to their asset allocation strategy. Guard against FOMO, avoid big commitments, and don’t exit, solely based on market fears. While maintaining equity exposure, consider rebalancing towards underperforming large caps for better valuation comfort."

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Published: 23 Dec 2023, 12:05 PM IST

As the bull run continues, it is time to exercise caution, say experts (2024)

FAQs

Will the bull run continue? ›

Overall, we expect the market to continue with its uptrend supported by many positive macro and micro factors. However, volatility cannot be ruled out given the start of elections this month. We believe large caps would do better compared to the broader market given valuation comfort over there.

Is the bull market good or bad? ›

So, why is a bull market considered a positive sign and a bear market a bad omen for investors? Maybe it's because bulls are known to charge wildly to get where they want. Bears can charge, too, but they tend to destroy things, eating, rummaging and generally causing more damage than bulls.

Is 2024 going to be a bull market? ›

With stock indexes at all-time highs, it seems we are in the midst of a new bull market. While much of the market's recent gains have come from a handful of stocks, the rally has begun to broaden in recent months. Expectations of an earnings rebound in 2024 suggest earnings could continue to drive the market higher.

What is the bull run theory? ›

A bull market, or bull run, is defined as a period of time where the majority of investors are buying, demand outweighs supply, market confidence is at a high, and prices are rising.

How long will the bull run continue? ›

The near term trigger is expected to be October-December quarter corporate results season, as companies will start reporting earnings from mid-January.

How long will a bull run last? ›

Sharma was apparently tracing back the start of the bull run to March 23, 2020, when the markets had hit a low due to outbreak of Covid-19 and started the upward journey from there. “Data is clear that no bull-market lasts beyond five years.

Does bull market mean up or down? ›

A bull market occurs when securities are on the rise, while a bear market occurs when securities fall for a sustained period of time. It's important to understand the differences between bull and bear markets and how they impact your investment decisions.

Is a bull market good for the economy? ›

Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.” During a bull market, investors are generally enthusiastic about a strong economy and solid job growth. The longest bull market in history started in 2009 and extended through 2020.

Can stocks go to zero? ›

When a stock's price falls to zero, a shareholder's holdings in this stock become worthless. Major stock exchanges actually delist shares once they fall below specific price values.

Will 2024 be good for stocks? ›

The Big Money bulls forecast that the Dow Jones Industrial Average will end 2024 at about 41,231, 9% higher than current levels. Market optimists had a mean forecast of 5461 for the S&P 500 and 17,143 for the Nasdaq Composite —up 9% and 10%, respectively, from where the indexes were trading on May 1.

What stock will boom in 2024? ›

Top growth stocks in 2024
Company3-Year Sales Growth CAGRIndustry
Nvidia (NASDAQ:NVDA)39%Semiconductors
Netflix (NASDAQ:NFLX)7%Streaming entertainment
Amazon (NASDAQ:AMZN)10%E-commerce and cloud computing
Meta Platforms (NASDAQ:META)10%Digital advertising
6 more rows

Is the US in a bear or bull market? ›

The benchmark's new record high close confirms that the S&P 500 ended a bear market when it closed on Oct. 12, 2022, and that it has been in a bull market since then, according to one measure. The S&P 500 had lost nearly 25% in a sell off between its last record high on Jan.

Is Bitcoin in a Bull Run? ›

Not yet. While signs of a directional move are there, investors need to watch the $67,937 to $70,024 imbalance. This zone also harbors the 2021 all-time high (ATH), making it a critical area to overcome.

What is Bitcoin halving in 2024? ›

A Bitcoin halving event occurs about every four years when the reward for mining is cut in half. Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply. Bitcoin last halved on April 19, 2024, resulting in a block reward of 3.125 BTC.

Will crypto Bull Run in 2024? ›

If you're looking for cryptos to buy, it is still not too late. As I've said many times over the past year, the crypto bull run was likely going to kick off in 2024. It's now clear we're in the midst of it, thanks to three key catalysts aligning in crypto's favor.

When to sell in bull Run? ›

Selling after the bull run climax can be an opportunity to lock in profits. A bearish swing and lows that are below the bull trend line can serve as indicators that the peak has been reached. Although it would be best to sell an investment right before the climax, it's an opportunity that's easy to miss.

Is there a bull run every year? ›

When is the Running of the Bulls? The Running of the Bulls is July 6-14 in Pamplona, Spain. The dates of the Running of the Bulls and San Fermin Festival are the same every year, no matter the day of the week. The festival begins on July 6th and concludes on July 14th.

What is the biggest bull run in the world? ›

The tech boom bull market is the biggest and longest bull market ever recorded in the history of the S&P 500, returning a stunning 582% and lasting a total of 4494 days (12 years and 4 months).

Where to invest during a bull run? ›

4. Safe investment: In the long run, index mutual funds tend to rise over a period of time. So, investing in index mutual funds is considered safer vis-à-vis other investment options. "Index funds typically excel during narrow bull runs or in falling markets but might underperform in broad-based, secular rallies.

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