Bulls May Continue to Surprise; Restructure your Portfolio Though!
Often enough, bull markets are characterised by a few sectors participating and pushing the stock prices higher. However, seldom will you find all the sectors participating at the same time. Metals dominated at the beginning of 2021, real estate followed, the textile sector joined the party albeit a little late, and all this happened post the impressive run by the IT and pharmaceutical sectors. Now, private banks are making their mark too by pushing Nifty Bank to all-time high levels. So, will we see a new all-time high in October?
It does not look very difficult for the market to do so, given the positive momentum backed by ample liquidity fuelled by the business-friendly government announcements spurring one sector after another. India is becoming a hot investment destination with China playing second fiddle. Apart from government stability and sound macro economy indicators, India’s export sector is luring foreign investors to Indian shores. For the equity markets in India to shine, the country does not have to grab the major chunk of export portfolio of China.
Even if India becomes a mini China for certain specific sectors such as chemicals, manufacturing and automobiles, it will be an outstanding performance not only for the economy but also for the listed companies as the profits and revenue will jump instantly and get reflected in the stock prices with improvement in valuations. Long-term investors at this point of time have nothing to worry about, not even valuations if quality stocks are what are held in their respective portfolios. You must hunt for value as there are several pockets of opportunity available for investors even in the current trending market where a majority of investors are worried about the PE multiple.
In our cover story we have guided investors to have a refreshing look at the automotive sector. Also, in the cover story that focuses on ground realities in the automotive sector we have discussed why we need to take a holistic investment approach and look beyond the traditional automobile players. A decisive government with futuristic policies for the sector along with adopting a consumer mindset is just a harbinger of good times for the automobile sector. Do go through our cover story and mail us your feedback. Also, share with us your thoughts on the emerging field of electric vehicles and tell us where you see fresh opportunities.
In one of our special stories, we have emphasized the importance of ‘steady stocks’ that tend to beat the markets. Some extremely useful observations are shared in the story, and I am sure esteemed investors like you, dear readers, will benefit from the message. In our other special story, we have highlighted the volatility in indices and have compared the Indian frontline indices with global indices in terms of volatility. Volatility in my view needs to be given more importance than we usually do.
With the broader markets participating right before we enter the festive season there is always a possibility of getting a little carried away with optimism. Without being too optimistic, apply your mind on the opportunities that sound concrete and durable. Focusing on quality is a must even though it means sacrificing market outperformance for the short term. Keep rotating between sectors in your tactical portfolio. PSU banks are also looking as if they want to contribute and shine. It may not be wise to tie up a lot of capital in defensives such as pharmaceuticals or FMCG when other high beta opportunities are promising better prospects. It’s time to restructure your portfolio with top sectoral bets!
RAJESH V PADODE
Managing Director & Editor