Nifty Crosses 24,000: How to Benefit from the Bull Run?

In an unpredictable financial world, the Nifty Index has, for the first time, reached the 24,000 mark, creating a bullish momentum in the Indian stock market. This remarkable surge has captured the attention of investors.

The question is- what led Nifty to cross this mark, and how can investors capitalise on it? Let’s find out in this article.

Factors Behind Nifty's Record Climb to 24,000 Mark

On June 27, 2024, a significant record was set when the Nifty index reached an unprecedented high of 24,015, instilling a positive sentiment in the financial market.

This bullish trend continued as the Sensex, on July 3, 2024, achieved a remarkable milestone by reaching a record high of 80,000 for the first time.

This achievement showcased a robust recovery from the challenging period during the COVID-19 pandemic when the Sensex had witnessed a low of 26,000.

There are several factors behind this upsurge in Nifty index stock price and Sensex share price. Some major factors driving this bull run are:

a. General Election 2024

The results of recent general elections always influence the dynamics of the financial market. A positive result for the favoured administration is viewed as a stabilising factor for the continued economic policies. This occurrence, in turn, helped maintain the upward trend of the market.

A 3% gain was observed in Nifty on June 3, 2024, in Nifty Index 23,263.90 to close at 23,338.70, when the exit polls predicted a strong majority of Narendra Modi-led BJP in the Lok Sabha elections. Additionally, the oath-taking ceremony led to a surge in the market, with Nifty making a new high of 23,412.

b. DII Support

Domestic Institutional Investors (DIIs) have provided strong support to the market, countering the sell-off by Foreign Institutional Investors (FIIs). The stability and upward trend of the market depend heavily on this support.

In the first phase of 2024, DIIs have aggressively invested in the stock market with the net buying already crossing the mark of ₹2 lakh crore. In June 2024, DII’s equity investment stood at ₹28,633 crore. This factor also played a role in Nifty reaching the 24,000 mark.

c. Global Interest Rate Trends

The expectation of rate cuts from the U.S Federal Reserve, in a way, has affected global markets including the Indian Nifty index. The RBI follows the U.S. Federal Reserve’s stance on cutting rates.

This usually has a positive impact on the economy as a result, also creates a positive environment for the Indian stock markets.

Investment Strategies to Capitalise on Nifty Bull Run

Some strategies that investors can use to capitalise on this bullish situation are:

a. Selective Stock Picking

As the Nifty index rises higher, investors should carefully choose the index stocks that have strong fundamentals, opportunities for growth, and competitive prices.

Basic analysis and research can help investors identify stocks that are well-positioned to outperform in the present market conditions. Post-election sectors like automotive, consumer goods, and healthcare generally do well with small and mid-cap funds showing significant gains.

b. Sectoral Rotation

During the different phases of the market, different sectors' stocks may outperform each other due to varying economic conditions and investor preferences.

By allocating their assets to sectors that are anticipated to gain from current market trends, political changes, or global developments, investors can capitalise on profit through sectoral rotation. Sectors like banking and infrastructure usually do well in an economy that is expanding.

c. Diversification

Diversification is one of the major fundamentals of investment, especially in times of market fluctuations. Investors need to reduce risk and improve portfolio resilience by diversifying their assets across sectors, asset classes, and investment styles.

To achieve a balanced risk-return profile, diversification strategies involving investments in different sectors like banking, IT, pharmaceuticals, and automobiles are necessary.

In addition to stocks, investing in mutual funds or Exchange-Traded Funds (ETFs) through Systematic Investment Plans (SIPs) enables investors to take advantage of rupee cost averaging and benefit from market volatility.

d. Long-Term Investing Perspective

Long-term stock investing has repeatedly proven profitable as stocks often yield better returns over long holding periods. Regardless of temporary market fluctuations, investors can make a profit from compound growth and capital gain by continuing to invest in quality stocks and funds.

If someone had invested in the stocks of Reliance Industries in 2010 they would have generated a 468.2% return on the original investment in 2024. In January 2010, the closing price of RIL stock was approximately ₹547 which increased to ₹3,108.05 in July 2024.

The Bottom Line

With the Indian stock market crossing the 24,000 mark, investors have a wealth of opportunities to profit from its bullish trend. By utilising strategies like sector rotation, long-term investments, and selective stock selection, investors can navigate the market effectively and meet their financial objectives.

However, investors should assess their risk tolerance, conduct comprehensive research and analysis, and ensure their investing objectives align with their financial goals. To capitalise fully on this bullish market, investors should maintain a well-informed, proactive, and disciplined approach.

To create wealth in a disciplined way, online investment platforms like Dhan offer daily, weekly, and monthly Stock SIP options. Investors can choose the frequency, and pause or modify the SIPs at any time.

Happy Investing!