Market In Correction Mode — Now Get Ready For Value Buying!

Market In Correction Mode — Now Get Ready For Value Buying! 

Finally, the bears had their say in the bull market. The much-awaited and required correction in the stock prices, I am sure, has not surprised many of us. A correction is a normal behaviour of the market and should be seen as a buying opportunity. While the sentiment globally may have changed from ‘risk-on’ to ‘risk-off’ mode, the long-term outlook for Indian equities remains intact. There may be temporary blips in the cash flows coming into the markets from retail investors and FIIs. However, the flows will resume as the sentiment improves. Smart investors need to pad up and be prepared for interesting buying opportunities if the market cracks further. In my view, the 31000-mark in Sensex will be a difficult level to crack. 

We bring a ‘CFO Special’ issue this time around as we think it is an opportune time to celebrate the contribution of the best financial minds in Corporate India. The CFOs are indeed business leaders who are not only financial experts but also professionals who can steer a company on to the growth trajectory, while keeping a tab on regulatory and risk management aspects of the business. Read the cover story and understand how the leading CFOs of India think their companies are placed today. Also, find about their top priorities and what they think of the economy at this juncture. 

One of the most important issues plaguing the health of retail investors’ portfolio is unwanted holdings of shares of companies where the percentage of pledged shares by promoters is very high. We thought it will be interesting at this juncture to bring to our readers’ notice how the companies with significant pledging of shares by the promoters have fared. Trust me, we have come out with some very useful information that may help you all (in future) to stay away from such unwanted stocks. 

One of the oldest doctrines in the stock market has been that the stocks with higher promoter holdings tend to do well. Well, we thought let us check out if the doctrine still holds true. I must say, the stocks with higher promoter holdings are the ones that should be preferred, assuming everything else remains the same. We did observe some sort of outperformance in stocks with higher promoter holdings. 

In one of our special stories we have talked about gold prices and how the demand and supply equation is shaping up for the precious metal. ETF buying has slowed in the H12017 and read the story for complete analysis and what may lie ahead in terms of Gold prices in H22017. 

Any retail investor in my mind will do good for himself if he avoids buying stocks with a combination of higher debt-to-equity ratio, promoter pledging more than 50 per cent of their shares and lower promoter holding in the company. Just keep away from these stocks to keep your portfolio healthy. 

Coming back to the markets, it is one of those situations where the investors’ faith will be tested. Do not panic and focus on the stocks that you have identified for investment. A case in point is Avanti Feeds. We had previously recommended the scrip in one of our issues (Issue dated 6-19th FEB at Rs 566) and it is doing exceedingly well (CMP 1948 ). The stock has low debt, no pledging of shares by promoters and has promoters’ holding higher than 40 per cent. 

The current market correction will provide investors an attractive entry point once again. 

Happy Investing !

V B PADODE
Editor- in- Chief