The Bottom Is Behind Us
While news like poor IIP numbers and Moody’s downgrading India’s rating suggest at a slow economic and market recovery, we feel that these reflect a retrospective pictureThe information coming in is lagged. To cite an analogy, the position of a star in the sky is not actually where we see it. The position we see is what it was when it emitted the light that is reaching us now. It takes a few years for light to travel from the star to our eyes. During this period the star has already moved to another position. Hence, we see the star with a lag effect. Similarly, we feel that the economy too has moved out from an unfavourable phase and the impact in the form of corporate performance revival would be seen with a lag.
When we interact with investors in course of our investor awareness events, investors nowadays express at being content with even an 15% annual return from their equity investments. This is a far cry from the earlier demanding desire of wanting nothing less than a multi-bagger return like we saw in 2017. This shows that investor expectations are at their trough.
So, while we are being shown report cards of poor performances of the past, we at DSIJ firmly believe the underlying recovery has started and the bottom is behind us. Also, if you were to look at the net inflows from FIIs this month, it corroborates with the view. The government’s recent rebates and reforms are kicking in and will show in the performance report card very soon. Do note, the month of October also showed signs of a slight uptick in the automobile industry, an important barometer of the direction of the economy. All in all, there is an improvement sensed across. And as usual the same will get factored in stock prices with a lag too. Investors who are recognising this now and more importantly acting upon it, will stand to benefit. And we want to ensure that the DSIJ family of readers and subscribers benefit from the same. As a testimony, the Sensex is already nearing our target of 41,500 (as mentioned in our issue dated September 2, 2019).
Our cover story this issue highlights the opportunities that lie in the PSU space. In case you missed the IRCTC IPO opportunity recently, do take note of the other opportunities in the PSU space that we suggest in this story. Also, we hope you like our top two recommendations in the PSU space.
Penny stocks have always been perceived as multi-baggers. However, a majority of investors have lost their entire capital when venturing into penny stocks. In our special report on penny stocks we have something interesting to share. We hope you enjoy reading our observations. Do share with us your feedback.
With the Sensex touching record highs, it is important that investors focus on the right areas in the market. One can expect an earlier recovery in stocks beyond the large cap space (especially mid-caps) even before sentiments revive across the board.
Happy investing!
RAJESH V PADODE
Managing Director & Editor