Stay Light And Invest In A Staggered Manner!
Suddenly, markets appeared to have recovered from all the external shocks, viz., rising crude oil prices, trade war and depreciating Indian rupee. While the drop in crude oil prices is just what the markets wanted, volatility is expected to remain in the markets owing to the upcoming state elections. My sense is that the markets will react negatively only if the BJP loses all five state elections. Otherwise, markets may trade range-bound. Investors ought not to get carried away taking cues from the recent upmove in the markets. One must hold some amount of cash as volatile markets may provide some lucrative opportunities. Remain invested, but do not invest 100 per cent of your money right now.
The recent market upmove, you all would have noticed, was also because of good corporate earnings this season. The sales of majority of companies increased by more than 20 per cent; however, the net profits grew by not more than 13.3 per cent. This clearly shows there was margin pressure owing to increase in input costs. The pressure on margins may remain due to the increasing commodity prices in the coming quarters. Having said that, the performance of Corporate India next quarter is expected to remain strong. NBFC worries also seem to be subsiding as liquidity problems are being addressed. With no major worries for the market and, at the same time, no positive triggers at the moment, the market movement could be sideways, with bigger swings owing to the elections.
In this issue, we have discussed about the portfolio management rules that an investor ought to follow to make money consistently in the markets. I agree that the execution and implementation of an investment plan and portfolio guidelines is more difficult than merely framing them, but it is always profitable to revisit the rules of portfolio management in order to discipline ourselves. Indeed, it is the dogged determination to stick with the investment philosophy and proven investment thesis that can distinguish winners from the losers. The determination and confidence in the investment philosophy and thesis comes from research, years and years of research, something which we at DSIJ have expertise in. I hope you all enjoy reading our “7 Golden rules of investing” and learn to keep the investing game simple enough to have fun in the markets even when the stock prices are tumbling down.
In one of our special reports, we have discussed about the recent earnings and have displayed the performance of various sectors. It looks like there have been certain disappointments in the banking sector, while there have been some positives for the IT sector. Go through our detailed reports on the Q2FY19 earnings season and let us know if you can identify any trend in the earnings.
Our other special story talks about specialty chemical stocks and the opportunity that lies in the sector for the investors. There is something big and positive happening in the specialty chemicals stocks, which I believe should catch investors’ attention once again. Do have a look at our only recommendation in the sector. I think you will profit from it. Stay light in the current market – it is definitely not a time to be leveraged. Hold some cash and invest in a staggered manner. Market is in great shape for the long term and you will see Sensex reacting to positive earnings growth in the coming quarters.
Focus on valuation at this point of time and stick to quality, as quality never goes out of fashion (in any market condition).
Happy investing!