Make the Buoyancy Work in Your Favour

Against all odds and in contradiction to many a people's expectations, the market is on a roll. Each day an investor feels that the markets have gone too high and that today there would be a correction. But the markets continue to hit a new high. Those who stayed pessimistic or followed analysts who suggested waiting for an opportunity to enter the market have now been left high and dry. Amidst this, our 34 years of experience of having seen markets behave in nonrational ways allowed us to wisely guide our fellow readers and subscribers right through this phase.

The DSIJ edition released in the second half of March 2020 (Vol. 35 Issue No. 08) carried a loud message on the cover page stating ‘Opportunities’. Then on, we have encouraged our readers to build their portfolio in a staggered manner over a 12-week period. As of today, all of them stand as clear winners!

Now, how do we decipher the current market going forward? Domestic institutional investors (DIIs) have been net sellers for the full month of July as also into August. Fortunately, foreign institutional investors (FIIs) have been net buyers, though to a miniscule amount. The euphoria of retail investor participation seems to have tapered out lately. Yet, the markets are moving up and in fact getting broad-based. The mid-cap and small-cap indices seem to be gaining ground faster. In all likelihood, while the economy’s pain is fairly public now and a correction is inevitable, it appears the market still has some steam to go higher in the short term. Promoters have been buying their shares and the expected 2nd US stimulus is going to have FIIs pump in further funds into the country.

Plus, the possibility of SEBI broad-basing the definition of the market capitalisation range for mutual fund schemes to invest in is also giving a boost to many a stock in anticipation. Taking all this into consideration, in our cover story we have discussed how defensive sectors may be in high demand for the rest of the year. These are also the sectors that have been least impacted due to the pandemic-led lockdowns in India.

Meanwhile, though many people bank on candlestick charting techniques while making trading and investment decisions, there are very few who understand which candlestick chart patterns are the most useful. As such, our special story focuses on ‘the five most powerful candlestick chart patterns’ that can be used by traders and investors to gauge market moods. Our other special story explains how one can deal with beaten down stocks and what aspects should be focused on while choosing such stocks. A piece of advice: continue to be stock-specific and focus on the broader markets at this juncture since it is in no mood to lie low!

RAJESH V PADODE
Managing Director & Editor