Nifty, Sensex up 25% on macro trends in Samvat 2080: What should be your trading strategy for Samvat 2081?

In Samvat 2080, the Indian market witnessed a sharp rise supported by the strong economic environment in the country. Nifty 50 crossed 26,250 and BSE Sensex crossed 85,900 in September 2024, with both the indices gaining about 25 per cent during Samvat 2080. BSE Midcap and Smallcap indices outperformed and gained 45 per cent and 50 per cent respectively.

Growth momentum in corporate earnings, strong GST collections, capex cycle revival, favorable monsoon and strong domestic demand are positive factors, while positive global cues along with strong liquidity through mutual funds remain supportive factors for the market.

The recent surge in crude oil prices, concerns of a global economic slowdown and geopolitical concerns are potential near-term upside risks to the economy’s overall GDP growth. The Indian market (benchmark index Nifty) has gained nearly 25% (till October 17, 2024) since last Diwali, while the global markets especially the major US indices have also gained in the range of about 27%-35% during this period Are.

What should be your trading strategy?

Swapnil Aggarwal, Director, VSRK Capital. But

SIP your way to financial freedom: Small-cap and mid-cap funds are important

With Diwali approaching, it is an ideal time to reflect on your financial goals and consider investing in Systematic Investment Plans (SIP). Especially in small-cap and mid-cap mutual funds, SIP can help you build significant wealth over the long term if you are willing to take some level of risk.

Starting your career early gives you the advantage of time. By consistently allocating 20-25% of your monthly income to SIPs, you can take advantage of the growth potential of small and mid-cap funds, which have historically offered 15-18% CAGR. Over a period of 10, 15 or 20 years, this disciplined approach can lead to substantial wealth accumulation. Although small-cap investments involve higher risks, they offer immense potential for long-term wealth creation.

The small-cap and mid-cap sectors, although inherently risky, are suitable for long-term investors looking to generate significant returns. These funds are expected to outperform others in the coming decade, making them an attractive option for people with a high risk tolerance. They can serve as powerful vehicles for achieving long-term financial goals such as retirement or other major life milestones.

However, while focusing on high-growth small-cap funds, it is wise to maintain a diversified portfolio that includes large-cap and mid-cap funds. This strategy can help balance your risk profile, ensure stability and minimize potential losses during market downturns. When selecting mutual funds, prefer ones with a proven track record of consistent performance over 5-10 years and look for options with low expense ratios to maximize your returns.

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