Remain Cautious While The Prices Become More Attractive!

Getting rid of excesses is what is happening right now in the market. In spite of the 12-odd per cent correction in Sensex from its all-time highs, what I gather is that we are still not trading at discount to the emerging market peers. The valuations though are getting attractive in the broader markets. While we do not want to predict where the bottom could be, we do think we are close to the bottom. 

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The market is mainly reacting to the IL&FS fiasco and the contagion fear it is causing in the NBFC space. Indeed, the government is taking the right steps so far to manage the crisis. However, we do not see the markets settling down until the crude oil prices calm down and Indian rupee finds some support. The election period is only going to make it more volatile and the increased volatility is going to create opportunities for many savvy investors. The prices have fallen anywhere between 10 per cent to 60 per cent for a majority of quality stocks as well, and that should be seen as a buying opportunity. 

Going ahead, the market will attempt to find a bottom and, while it does so, volatility will test the best of investor’s patience and conviction in the markets. As always, the only job that any investor has do all the time while in the markets is to identify quality stocks after doing a thorough analysis of the market situation. Assess if the situation is going to get better or worse. In my view, the situation may get a little worse before it gets better. The overall economic growth is intact for India with the IMF predicting the country will remain the fastest growing economy in the world. India may grow by 7.3 per cent in 2018, while the world economy is expected to expand by 3.7 per cent. A previous report had pegged the world economic growth at 3.9 per cent. This indicates that the global growth is expected to slow down. Remain cautious and look at the sectors where there is underlying demand for the products. 

The current issue is a special issue on mid-cap stocks. In the cover story, we have attempted to demystify mid-cap investing, while highlighting the recent performance of the mid-cap stocks. The special issue will also carry a financial snapshot of the top 250 mid-cap companies. I am sure you will use the list of 250 mid-cap companies to construct your portfolio. Investors should judiciously include mid-caps in their portfolio after deeply researching the mid-cap stock ideas. We have recommended few mid-cap stocks and I hope the market environment will allow the stocks to deliver what is expected of them. 

In our special story, we have covered the sugar sector stocks. Recently, the sugar stocks have caught the attention of the investors. We have analysed the sector and the stocks within the sector. Something interesting is brewing in the sector and we have shared our insights on the same. Do let us know if you find our special story useful. Staggered buying is the best thing to do in such a market scenario where the uncertainty is high, but the valuations are getting cheap. 

Happy investing is careful investing!