Top the Game, Not the Markets

Top the Game, Not the Markets

The recent sell-off in the global markets did push the S&P BSE Sensex down but only by a per cent or so. As you would have observed, any such dip activates the bulls to aggressively buy stocks. Such dips can hardly be called a correction. Nonetheless, this is no time to be complacent as the sell-off could intensify in the coming sessions if the negative triggers persist. S&P BSE Small-Cap index is already down by nearly 3 per cent from its record highs. The underperformance in the broader market reflects the pain more accurately. 

While everyone is talking about the Evergrande crisis in China and how the ripple effect could play havoc in the equity markets in India, let me highlight the fact that the markets will need much more than just a crisis in the Chinese economy to ‘crash’. If there are negative comments from the US Federal Reserve in terms of increasing interest rates and if the earnings were to disappoint along with the overall economic growth slowing due to increasing corona virus cases, we will have a tough market for investors both in the short and medium term. Unless and until all these negative factors don’t play out, we may simply face such small dips that will eventually iron out. Hence, the call continues to be ‘buy on dips’.

As the debate goes on about whether we have already seen the market top this year or whether an increasing number of higher highs are to be seen in the remainder of 2021, we thought it would be interesting for investors like you to be provided with an analytical perspective on the market tops in the cover story. Thus, the cover story this time talks about the different ways to identify market tops. It will help you to understand the several indicators that are used to identify market trend reversal and the likely market tops.

Tata Group’s stocks have been creating wealth for years and investors trust the Tata brand of companies for their quality consciousness and ethical business practices. Our special story analyses the potential that lies in the Tata Group stocks and scans the investing opportunities within the group. Don’t miss it. Our other special story analyses the prospects of the IT sector in detail, also focusing on the opportunities and the challenges faced by the booming sector. IT stocks taking a beating in China has come as a blessing in disguise for the IT sector in India.

Commenting on the markets, we are very much in the zone where markets can go either way. Predicting a market top is as difficult as predicting a market bottom. Always remember that money doesn’t leave any asset class – it travels from fearful investors to more opportunistic investors. There is a difference between being fearful and being cautious. Remain cautious but never fearful. No money can be made in the equity markets if you are fearful.

Keep your core portfolio invested in equities as this asset class will remain the most promising of all the asset classes. For your satellite portfolio continue to book profits as opportunity arises. Market corrections will happen, and market tops will be made now and then. In the pursuit of timing the market top it is possible that one may lose the opportunity of a lifetime to create wealth in an asset class which is attempting to deliver its all-time best performance. All one needs to do is stick to quality stocks, discipline your mind and avoid any speculative bets, especially when the bulls themselves are surprised about how high they have pushed the markets. You can always trust DSIJ with top-notch stock recommendations that may more than survive this volatile period in the equity markets. Be in touch for latest opportunities as the market sways between corrections and making new tops.

 RAJESH V PADODE
Managing Director & Editor

 

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