Buy On Dips - The Most Profitable Strategy Right Now!
Once again, we have a geopolitical situation spooking equity markets all over the world. The impact on emerging markets is deeper even as the emerging market currencies hit multi-year lows as the Turkish sell-off spreads. Yet again the confidence and conviction of equity investors will be tested. I think this market is a clear ‘buy on dips’ market. The IMF has projected GDP to grow at 7.5 per cent for FY19-20. We think the GDP may clock 7.75 growth rate in FY19-20. The macroeconomic situation is impressive and India may actually emerge as a winner in the current global trade war situation.
The earnings have been impressive so far in this quarter. So, focus on those stocks with superior earnings as it is only logical for the stocks with superior earnings to go higher. Capital goods companies, FMCG and private banks have been impressive with their performance in the latest quarter.
Investors ought to develop a concentrated portfolio of not more than 10 to 15 quality stocks. There is no need to have more stocks in the portfolio. If you have a better investment idea, get rid of an older stock and replace it with a new one. Don’t just keep on adding new stocks in the portfolio because you will end up creating a portfolio that will underperform key benchmark indices.
Portfolio management is the key to beat markets. If you can’t do it yourself, hire an expert. There are services such as portfolio advisory service (PAS)—one that is offered by us—which will definitely help you define weightages for each stock that need to be a part of your portfolio. Money making isn’t only about stock selection and timing, it is all about portfolio management.
In this issue, we have attempted to put an end to the private sector bank versus public sector bank debate. Indeed, a diversified portfolio should have room for stocks of quality public and private sector banks. The cover story explains how much weightage should be given to the banking stocks in the diversified portfolio and which category of public sector banks should be included in the portfolio. Do let us know if you like our suggestion.
In one of our special stories, we have discussed the prospects of oil marketing companies (OMCs) considering that the crude oil price is on the rise. We believe the story will help investors who are actively considering including the OMC stocks in their portfolios.
In our other special story, we have focused on the FMCG stocks and have revisited the sector in order to understand if the sectoral stocks are ripe for profit-booking. The growth story in FMCG sector is real and hence the decision to book profit in FMCG stocks may prove to be expensive. Have a look at our observation and let us know if you find it useful.
Stay focused, be hungry and not scared if the market falls in the coming days. Buying on dips in the current market conditions is the most appropriate action that needs to be taken.
Happy Investing !