Profit Booking Imminent Now
A breath-taking equity market rally is finally showing signs of consolidation. And yes, consolidations are always good as they let the market forces synchronize with reality. Investors can sit back for a little while and take stocks of things that have happened and are expected to happen across the globe. No doubt the mood is positive and the sentiment is conducive for long-term equity investors. However, we may now be tilting towards over-optimism and overconfidence. The prices may inch up but at a slower pace in 2021.
As of now it looks like news about vaccine development and distribution and the stimulus positivity are factored in by the global markets. The USD may inch up in the near term, which augurs well for IT stocks and to an extent for export-oriented pharmaceutical stocks. However, it may lead to temporary drying up of liquidity, causing the rally to halt and eventually clear the path for some profit-booking to take place in the overall markets. Remain cautious in the short term, though things are looking positive in terms of a longer horizon with a faster-than-expected economic recovery in India. Business leaders in India have rarely been this optimistic in recent times and the most optimistic among them have pegged GDP growth for India at 11 per cent in FY22.
Taking all this into consideration, the current edition is a special one as we bring to you the economic and sectoral reviews which summarise and quantify the performance of the ‘Top 1,000’ listed companies of corporate India. The analysed data in the economic review and sectoral reviews will help investors like you to get a bird’s eye view on how the top companies across the sectors have performed in the first half of FY21. Analysing sectoral performance is an essential element of fundamental research. Hope you all make the most of the synthesised sectoral data and gain from it.
As it is December and we are nearly at the end of what can at best be called a tumultuous or harrowing 2020, it is the right time to focus on what lies ahead of us in 2021. In our cover story we have come up with a ‘where to invest in 2021’ portfolio which we believe can outperform the markets. The cover story also talks about the market outlook for 2021 that will help you plan your investments for the coming year. There are multiple positive triggers for the markets in the long run but in a shorter term there is a good probability that the markets will get choppy. Profit-taking will happen sooner or later and investors need to start taking some profits off the table. Even while booking profits, apply a staggered approach. Do not leverage and overtrade. Remain diversified and concentrate on your conviction stories.
Before I sign off from the last issue of this calendar year, I would like to personally thank all our readers and subscribers for supporting and encouraging our media house through the tough times brought on by the pandemic. I am proud to state that with your support we have been able to keep printing the copies through these troubled times while many so-called renowned publications had to per force stop publishing physical copies. This is a testimony to our profound commitment to our readers and subscribers – not just during these times but right from 1986. Thank you all. And step ahead into a fresh year with hope, faith and good health. Happy investing!
RAJESH V PADODE
Managing Director & Editor