Markets Are Not For The Faint-Hearted!

To start with, I would like to wish you all investors a Happy & Prosperous Diwali. I also take this opportunity to thank you all for being with us all these festive seasons and allowing us to share wealth-creating ideas with you all. 

This Diwali, the prices for majority of stocks have fallen sharply even as Sensex is flat on a YTD basis. With more than 50 per cent stocks down by more than 50 per cent from their all-time highs, the only thing I can say is that it is now time to identify buying opportunities. There are global headwinds and problems (liquidity) in the NBFC sector are creating concern for the markets. In spite of the challenges, we believe earnings growth in the coming quarters should help push the markets higher by next Diwali. 

It is a given that markets will be volatile till the elections get over next year. If history has taught us anything, investors should be open to investing in turbulent times as best of the investment opportunities are identified in such volatile times. In my view, analysing the global geopolitical situation and the economy will be the key to understanding market moods. It may be impossible to predict what action the US president may take as his behaviour is more erratic and not traditional on the trade front. I believe what happens to crude oil prices as an outcome of the motley of global events will be the determining factor for equity returns in India. It is crude oil prices and the widening trade deficit that concerns the market and, in all probability, the crude oil prices are expected to remain firm and the trade deficit is expected to widen. Barring this concern on higher energy prices and the widening trade deficit, the fundamentals of the economy are intact and we will remain the fastest growing economy in the world. Domestic investors will continue participating through mutual funds as the popularity of mutual funds remains high. The FIIs have been net sellers lately in the Indian markets and have been chasing developed markets. This tide may turn in favour of emerging markets, post the correction in stock prices in
India and other emerging markets.

 

The current issue is a Diwali special issue. I am glad that our previous Diwali portfolio has managed to deliver stable returns and has beaten the Sensex, albeit by just a small margin . In the cover story, we have discussed how the markets behaved from previous Diwali to this Diwali. This issue also carries the much-awaited Diwali recommendations. DSIJ research team has recommended seven stocks for this Diwali, which we believe should do well till next Diwali. I think long term investors should have a serious look at the recommendations and take appropriate decision about their portfolios. 

In our special story this issue, we have discussed the prospects of cement stocks and what is happening in the sector. There is definitely an investing opportunity in the sector, especially now that the stock prices are trading close to their respective 52-week lows. 

This market is not for the faint-hearted. Patience and ability to show courage rationally will help investors in such turbulent times. If we have not tested the bottom yet, we are very close. Investing in a staggered manner over next six months is advisable. 

As a long term investor, your only job is to scan quality stocks, analyse the growth prospects and understand the market sentiment and gauge if the sentiment is going to improve in future. Any market condition throws up plethora of investing opportunities. We just have to listen to what the market is saying to us. 

Happy Diwali once gain & Happy Investing !

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