The new normal for the Indian equity indices is to hit fresh record highs with the benchmark Nifty 50 marking its fourth 1,000 point milestone this year.
The index has grown 15% so far in 2024, hitting a new record highs on 54 unique days. To put this into perspective, the current year so far had only 166 trading days. This puts the frequency of hitting a new high at a median of nearly once every three days.
But with the no signs of 'mean reversion' in sights, investors remains in a dilemma if investing at this stage is the correct choice.
"[The market] can remain irrational more than I can remain solvent," Nilesh Shah, managing director of Kotak Mahindra Asset Management Co., told NDTV Profit. However, he emphasized that the fundamentals continue to demonstrate the earnings growth of the past two years.
"I think when you're investing in equity markets, you look at valuations, not necessarily the index," he said, further clarifying that the valuations are clearly away from their lifetime high levels, at least in the large cap space.
"Maybe 25% of the market is frothy. 75% still provides an opportunity for long-term investors," he said.
That said, the immediate returns do seem to take a temporary pause once the index hits a major milestone.
The performance of Nifty 50, on average, was worse during the five days that followed reaching a key record level, compared against an average five-day return recorded by the index over the past three years.
On average, the index fell 0.92% after hitting a milestone mark, while during any five-day period in the past three years, it has delivered positive returns with an average of 0.31%.
Watch LIVE TV, Get Stock Market Updates, Top Business, IPO and Latest News on NDTV Profit.
