2024-02-21 08:31:24
Mumbai:There is a bullish trend in the Indian equity market. Today the stock market opened higher. Last Tuesday, the bullish trend in the stock markets continued for the sixth consecutive trading session. Yesterday, there was a rise in the stock market due to buying in shares of banks and selected companies manufacturing daily use goods. Even today the stock markets opened higher. Why didn’t it speed up? At present the economy is in a strong position. Therefore, opportunities are opening up in all sectors. However both economic fortunes and the fortunes of individual businesses are cyclical. This makes past performance an unreliable guide to the future. Looking back, there has been a drastic change in the sectors and stocks leading the Indian market in the last two decades.
many turning points of the economy
Sunita Satpati of Glossam Life Coaching LLP says that after the year 2003-04, the next turning point came between 2011 and 2013 and then came 2016 when demonetization was announced. During each of these phases certain areas came into prominence. It is difficult to recognize such stages when one is going through them. This is where business cycle based investing comes in. According to Satpati, investing in business cycle funds is generally based on macros and has different characteristics. The first is a top-down approach that leads to identifying theme changes. It invests based on market cap to capitalize on opportunities across the universe. More attention is given especially to those selected subjects where there is strong belief. High and focused importance is given to those themes and areas where one is confident of competence.
identify change
Market experts say such investments require a top-down approach as well as a high level of expertise in identifying sector and business trends. Because, the topics and sectors leading the market can change rapidly. For an investor who wants to invest in such themes, it is important to understand that he or she should take a long-term perspective while investing as it may take some time to get a call.
Many funds based on business cycle
If we look at the mutual fund market, there are many fund offers based on business cycles. One of the consistent performers in this space has been ICICI Prudential Business Cycle Fund. The fund has a three-year track record and has delivered excellent returns so far. If an investor had made a monthly investment of Rs 10,000 through SIP since the beginning i.e. three years ago, then his total investment till date would have been Rs 3.6 lakh. By January 1, 2024, the value of this investment will be Rs 5.23 lakh, i.e. capital appreciation of Rs 1.63 lakh. This represents a CAGR return of 26.8%.