Share Market: The stock market is touching new heights every day, is it time for profit booking?

What should investors do when share markets are on highs: The Indian stock market is constantly touching new heights. On Monday, the stock market’s major blue chip index Nifty 50 once again touched its highest level ever. NSE’s Sensex is also constantly trading above 80 thousand. In such an environment, when the stock market is constantly reaching new heights, what should retail investors do? Should they book profits to secure the profits earned so far or should they wait for the investment value to increase further? What will be the right strategy for small investors in a bullish environment? To understand the answer to this question well, it is important to first understand the boom in the stock market.

What does new height of Nifty and Sensex mean?

Whether the Sensex crosses 80,500 or the Nifty crosses 24,500, these market figures make you feel good because the value of your investment increases. It should also be kept in mind that the small cap index has seen a higher growth than blue chip indices like Sensex and Nifty. During the last one year, the Sensex has increased by about 21%, while the Nifty 50 has jumped by about 25%. In comparison, the BSE Small Cap Index (S&P BSE SmallCap) has increased by about 59% in the last 1 year and the Nifty Small Cap 100 Index has increased by more than 67%. All these figures tell what is the average growth of all the stocks included in an index during a given period. These figures affect the sentiments of investors.

Also read: Stock Market: Sensex, Nifty continue to rally, TCS up nearly 8% since results

at the height of the marketprofit bookingWho is right for,

The stock market reaching such heights means that many investors must be making huge profits on their investments. So should they sell their shares and take out the profit? Actually, there is no harm in doing so, if you fall into any of the following categories of investors:

• Such investors who came to the market without any preparation to invest for a very long time have now made good profits.

• Long term investors who have been investing continuously for 5-10 years and have now earned enough to meet their investment target can withdraw some part of their portfolio (10 to 25% as per their strategy) from equity and invest it in debt or any other fixed return instrument.

• By doing so, the risk on their investment will also reduce and at the same time, if there is a correction in the market in the future, then they will also be able to use new investment opportunities that arise.

• If an investor has invested with the focus of repaying home loan, saving money for down payment of a house or any such specific target and now his target is getting achieved, then this can be a good opportunity for him to withdraw the money.

• Investors whose chosen stocks or equity funds are not consistently performing as expected can also take advantage of this bullish environment to adjust their portfolios.

• Investors whose portfolio has seen a significant increase in equity due to the rise in the market can book some profits to balance their asset allocation and invest that money in other assets as per their investment strategy.

Also read: Gold vs Nifty: Gold surpassed Nifty in terms of returns, what will be the trend going forward

Profit booking is not right for everyone

Despite the rise, the option of profit booking cannot be said to be right for all investors.

• All such investors who do not fall under the above mentioned reasons for profit booking should remain in the market.
• Short term investors who have started regular investments through SIP a year or two ago should stick to their investment journey.
• For those investors whose investment target has not been achieved yet and is likely to be achieved in the next few years, staying in the market is a better option for them.

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Do not make investment decisions based on sentiments

The most important thing is that if you invest in equity, you should make your investment decisions keeping your target in mind. Nifty, Sensex or any other major index touching new heights may be very exciting in terms of sentiments, but your financial decisions should be based on correct facts, logic and strategy, not just on emotions.