New market high does not guarantee a fall, most times leads to further growth

From Business Standard: 2024-07-22 03:13:19

Indian stock markets experienced a mixed performance last week, with the Nifty 50 hitting a new all-time high while mid-caps and small-caps faced a correction. Historically, hitting new highs hasn’t always preceded a market drop, with 57% of cases showing positive one-year returns post all-time highs.

All-time highs are a normal part of long-term equity investing, with market growth necessitating new records. Equity markets often rally after experiencing a pattern of all-time highs, showing that hitting new peaks can lead to further growth rather than an immediate decline.

Data from the last 24+ years indicates that investing during all-time highs in the Nifty 50 TRI has resulted in positive 1-year, 3-year, and 5-year returns. This suggests that all-time highs do not necessarily signify an imminent market fall, with strong returns often following record-breaking levels. Mehta recommends maintaining original asset allocation, rebalancing if needed, and continuing with SIPs amidst market highs.



Read more at Business Standard: Does a market high automatically mean a fall? What should investors do? | Personal Finance