Wait And Watch Is The Mantra Right Now!

Indian markets are down by more than 6 per cent in one month. It is the worst performing market in among the emerging markets even though it remains one of the best performing markets globally on a YTD basis. The IL&FS default in interest payment was the trigger for the recent market downfall. The rising crude oil prices, weakening rupee, expectations of tighter monetary policy, trade war fears and the fear of default by NBFCs are weighing heavily on the market sentiments. 

In our cover story in the previous issue (No 21, Volume 33) we rightly hinted about the selling pressure that may hit the markets and the need to ‘Book Partial Profits Now’. It is always a satisfying experience when we are able to assist investors like you in either creating or protecting wealth. 

In the current market situation, I think investors should wait and watch and not to be in a hurry to take investment decisions. Let the markets stabilise, which I believe the markets will. Having said that, normally the volatility is on a higher side during this time of the year. Expect continuity in volatility in the coming months owing to state elections and higher crude oil prices with strengthening USD. 

The small-cap stocks have disappointed majority of the investors in CY18. This is our special edition on small-cap stocks. I believe the small-cap supplement should delight you all, with the list of top 400 small-cap stocks filtered based on sales, PAT, dividend and market cap. 

In our cover story focusing on the performance of small-cap stocks, we find that there are opportunities galore for long-term investors who can focus on quality growth-oriented stocks and have nerves to remain invested in the volatile environment. In spite of the underperformance by the broader markets, there are more than 180 small-cap stocks that delivered more than 25 per cent returns in one year. 

We have a couple of small-cap recommendations for you in the cover story. I hope you profit from it. 

Our special story discusses how the news impacts the key benchmark indices in the near term and why it does not matter in the long term. Read the special story indeed for some very interesting observations. I am sure long-term investors like you will use the observations in the special story to make your investment decisions optimally. 

While it is of paramount importance to focus on quality stocks in any industry, I want to specifically highlight the opportunity created in the markets right now after heavy selling in the NBFC space. If this is not an opportunity, then I don’t know what it is. Just ensure that you stick with quality stocks and do not leverage trade. 

Remember, portfolio diversification is the key to success in equity markets and sectoral allocation is an integral aspect of portfolio diversification. A right amount of portfolio needs to be invested in the right sectors. And don’t book losses in panic if you are convinced about the fundamentals of the stock. If you are holding on to poor quality scrip – book the loss immediately. Markets will punish poor quality, as it always does. 

Stay focused, stay diversified and remain invested for the long term!