Long Term Investors To Be Rewarded

What an interesting moment in equity markets we are faced with. On the one hand, we have the fastest growing economy in the world catching foreign investors’ attention and, on the other hand, we have rich valuations making it difficult to participate in the market aggressively. This, I am afraid, is always a dilemma that investors have to deal with on a regular basis, especially during a risk-prone environment. A small retracement in the markets, as is currently witnessed, can only help long term investors to re-enter markets as select stocks will be available at cheaper levels.

We believe investors can focus on select public sector banks (PSBs) that have corrected in the current market, along with infrastructure stocks. Buy the deserving PSBs with a time frame of two years, at least. Apart from banks, cement stocks should continue to be a part of your portfolio as the demand for cement will remain healthy. The thrust on infrastructure sector by the current government will keep cement companies busy and the stock prices will only reflect the growing demand for cement

 Long-term investors can look closely at the logistics sector as GST is now a reality. For some of the contrarian investors, pharma sector can also be looked at from a long term investment point of view. Certain pockets of mid-cap and small-cap stocks have corrected sharply and should not be ignored, if one is aiming at aggressive returns.

In this issue we have recommended select metal stocks that can be added to your portfolio and can be expected to outperform broader markets. We think that the commodity prices may remain firm going ahead and the demand-supply situation is in favour of the producers this time around. Do have a look at our recommendations with a long term view.

Our special story in this edition focuses on Narendra Modi government’s three years in office and how it has made a hugely positive impact on the country’s economy and stock markets. The Modi government’s investor-friendly, market-friendly and pro-reforms stance has been taking the country’s development on a fast-paced growth trajectory.

As markets have turned volatile, the best way to participate in it is to invest in a staggered manner. As the bullish trend is intact and there are no visible risks that can disrupt the market, one can continue buying on dips. The FIIs, as expected, have been consistently buying into Indian markets and are expected to do so in foreseeable future. However, the DIIs have been net sellers, citing rich valuations.

The strengthening Indian rupee has been a boon for FIIs and as long as the Indian rupee remains strong, FIIs may continue to pump in funds into Indian markets. The positive fund flows from FIIs and DIIs turning net buyers post revival in earnings should see markets scaling higher peaks over the medium to long term horizon.

Pick and choose your scrips smartly and hold on to them for the long term as markets are going to reward those who have the right temperament to stay invested for a longer haul.

Stay focused, stay invested.