Its Time for Quality, Not Quantity

Its Time for Quality, Not Quantity

Believe it or not, despite the economic challenges foreseen, there is a race going on between small-caps and mid-caps to top the markets. While this is encouraging news for investors, there are some concerning signs emerging as many poor quality stocks have also started rising steeply in the current markets. There are a lot of money-chasing momentum stocks and it does not take time for this frenzy to overdo the confidence. This brings us to an inference that while markets do have more steam and may not tumble immediately, it is worth taking some profits off the table wherever possible.

Our cover story talks precisely about this while explaining the logic why it needs to be done. The story also speaks about the reasons why the markets are rallying and explains that profit booking should be a healthy portfolio management exercise. Secondly, looking at the phenomenal performance of FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks, it is only natural that investors would want to invest in them. With so many platforms now made available to Indian investors, it is getting increasingly irresistible to avoid investing in offshore markets. Our special story highlights the pros and cons of international investing while highlighting the need for diversification.

This issue is particularly special as it is an annual edition of our ‘CFO special’. In this issue we have interacted with the finance leaders of India Inc. and managed to provide deep insights into their individual strategies and how they are calling the shots in this crisis situation to bring profitability back on track. CFOs are the ‘most suitable business leaders’ whom we need to listen to in order to understand the real situation on the ground. They provide a clear window to the existing scenario as numbers cannot lie and in today’s world they play a vital role to steer a company back to the recovery path.

We are extremely glad to bring forth the views of the who’s who of corporate India on the current situation faced by their respective companies and the industry they operate in. We are sure that readers will profit from their views. Meanwhile, as a strategy, while booking profit on selective stocks you may want to consider broad-basing the portfolio by increasing the tilt towards quality small-cap and mid-cap stocks. As the market continues to soar, be wary and beef up your guard against all the rising noise.

At times like these it is easy and also tempting to lower defences and become careless. Don’t do that. Spend more time to check the health score of a company, scrutinize its performance thoroughly, and go ahead only when convinced on the fundamental quality of the stocks. Do note that it is more difficult to identify a stock when the markets are getting heated up. Meanwhile, the US elections are also around the corner. Things may become volatile and over-exuberant. Stay tuned with us and we will continue to guide you through the maze of investments. May the force be with you!

RAJESH V PADODE
Managing Director & Editor

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