Where to Invest When the Stock Market is at the Top

The stock market is a game of highs and lows. The general thumb rule followed by seasoned investors is to invest when the market is low and sell when the market is high. During the coronavirus pandemic, the market has seen the lowest of low in many years. However, the success in manufacturing the vaccine for the pandemic has instilled confidence in the investor community, and the market bounced back to near-normalcy. In fact, there have been instances of the stock market showing a significant high, not seen in many years. However, the highs in the equity market also spark a state of dilemma as to what must be the course of action when the stock market is rallying at the top.

As the market is showing positive signs and continuously hovering at the top, here are a few options that an investor might consider:

Infosys

Infosys is a technology giant, and the current coronavirus pandemic has not affected the IT sector much. It is owing to the system-based nature of their work and the least disruptions in the incoming work from overseas. Owing to sound fundamentals, Infosys is a suggested buy and hold.

The range of Infosys Buy is from Rs 1440 to 1470. The stop loss threshold for Infosys is 1414. The Target price for this particular share is in the range of Rs 1560, 1640 and Rs 1700.

Hero Motocorp

The automobile did not lose its shine despite its separation from the Honda a while ago. Owing to a solid cash flow and robust rural demand, the two-wheeler maker is a certain Buy from the experts. The purchase of this equity share can be made in the range of Rs 2870 to Rs 2910. The stop-loss limit for Hero is 2744. The target price for this stock can be taken at in the range of Rs 3100, 3300 and 3500.

Delta Corp

The diversified group has been a promising bet in recent years and suggested by many industry experts. During the pandemic times, Delta Corp has actively invested in online gaming and hopes to scale it further. With the mass vaccination drive gaining momentum every day, Delta Corp is a suggested buy. It is a buy in the range of Rs 167 to Rs 177 with a stop loss at Rs 142. The target price for this stock can be in the range of Rs 195, 201 and 233.

Despite the pandemic, the Indian stock market has displayed significant resilience. It has gained momentum from February 2021 and reached a high of 14,431 marks. It shows the inherent strength of Nifty indices.

However, when the options writing is near the 15,900-16,000 marks, it is indicating that it is posing a challenge for the Nifty to move past this mark.

If core statistics and mathematical models are followed, for the further rise, Nifty will have to surpass the 15955 marks. If Nifty is able to strongly and sustainably cross this level, then we can witness the 16,250 marks very soon as it is a Fibonacci series extension of 15431 to 14151. These levels were visible during the second wave of the coronavirus pandemic.

Despite the second wave and related challenges, the Indian stock market has not flattened mercilessly and has in fact shown ultimate recovery in the recent months. The lows also provided the investors with an opportunity to invest in otherwise unaffordable stocks, benefits of which they would reap in the years to come. However, for those who have missed the bus, all is not lost and there exist excellent options to invest in despite the market rallying high.

The author is Vice Chairman, GCL Securities.

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.