How to Invest Smartly in 2024?

There is no doubt that 2023 was a stellar year for the Indian stock market as it saw new records being made for the frontline indices. In June, the Nifty 50 broke through the 19,000 level and reached 20,000 in September. On December 8, it soared past the 21,000 mark, culminating in a record high of 21,492 points over the next five trading sessions. Similarly, the S&P BSE Sensex also scaled unprecedented heights, surpassing the 64,000 mark in June and reaching 67,000 level in July.

In November and December, the index experienced a substantial jump of 7,731 points to reach 71,605 points. Overall, the Nifty 50 and S&P BSE Sensex gained 18.30% and 17.22%, respectively. The small and midcaps were seen running past the large caps, giving astounding returns of 48.06% and 39.72%, respectively.

But shall we bank on the returns generated in 2023 going forward? What mistakes should we avoid? Entrepreneur India spoke to the titans of the financial industry on ways to invest smartly in 2024. Here's what they have to say.

RADHIKA GUPTA, MD & CEO, Edelweiss Mutual fund

The year 2023 was a year of surprising bull market. The markets touched new highs. While the 30-share BSE benchmark Sensex crossed 71,000, the broader NSE Nifty breached the 21,000 mark. We have seen that in such scenarios people often get carried away. Seeing the bull run, they increase their risk appetite, opt for products they don't understand and change their asset allocation. In 2024, the important lesson for the public is to not be influenced by past one year returns. Instead just stick to one's asset allocation, and continue to have realistic expectations.

ANTHONY HEREDIA, MD & CEO, Mahindra Manulife Mutual Fund, Vice Chairman, AMFI

Key to investing successfully in 2024 would be to remain diversified, and stay for the long term, at least 5 years or more. Investors tend to get influenced by recent returns in their choices, and that often ends up in disappointment. Sometimes, choosing the opposite route pays dividends. For example, fixed income fund returns may not be exciting from a last 1 or 2 year perspective, but given where interest rates are likely headed, buying long term bond funds or quality long term deposits would be a smart call to make. Products that combine all of these, like multi asset funds would be the most suitable choice for investors in 2024.

RAHUL SINGH, CIO- Equities, Tata Asset Management

Reflecting on the market dynamics of 2023, an astute approach to investing in 2024 involves a judicious blend of caution and optimism. The bullish trend witnessed in 2023, propelled by the investment cycle and manufacturing recovery, suggests a positive outlook for the broad market in the coming year. However, after an impressive rally, it is crucial for investors to be mindful of potential corrections, especially in mid and small-cap segments, where some consolidation is anticipated in the next six months. A diversified portfolio, with a focus on cyclical sectors like banking, infrastructure, power, manufacturing, and capital goods, could be prudent.

LAKSHMI IYER, CEO, Investment & Strategy, Kotak Alternate Asset Managers Ltd

The past year returns especially in mid and small cap equities look exemplary and may not sustain momentum. Be watchful of pitfalls and do not let greed get the better of you. Also, 2023 has been a gratifying year for financial asset classes, as also physical asset like gold. One should continue to focus on asset allocation and use the asset classes for its intended purpose. One could look to add duration to fixed income portfolio as interest cuts in 2024 could lead to potential capital appreciation and not mere carry which investors earned so far.

BHARAT PAREEK, Head- Product & Segments, PWM, ICICI Securities

In the world of investing, consistency, discipline and patience are key virtues to become successful. The year 2023 has shown us that the markets can be extremely volatile, hence investing through SIP in such times is helpful in creating long-term portfolios. SIP brings in consistency and discipline along with the added benefit of rupee cost averaging. Consistently building your portfolio is also better rather than waiting for sharp corrections to invest in large lump sum amounts. For example, many political analysts were expecting a tough victory for BJP in the recently held state elections. But it turned out that BJP won by huge margins triggering a rally in the markets. If an investor was waiting on the sidelines, anticipating a correction post-election result, he would have lost out on 12-15% returns delivered by the markets within a very short span of time.

ANIL GHELANI, Head, Passive Investments and Products, DSP Mutual Fund

During the second week of December the RBI MPC left the repo rate unchanged for the fifth time in a row. Few days later, there was a similar outcome in the US. The US Fed kept interest rates unchanged and moved to a very clear dovish outlook for 2024, with 75 bps cuts expected. The expected rate cuts and "easy monetary policy" coming up in 2024 for the US can be a big trigger for interest rate cuts in India as well. This turned the spotlight for investments in the fixed income space. Currently we are seeing fixed income yields at multi-year highs which can make debt funds more appealing. One can invest in longer duration fixed income securities or mutual funds which will stand to benefit more in a falling interest rate scenario playing out during 2024.

(This article was originaly published by Entrepreneur India.)