Cross the Bridge When You Come to It
As of now, with the Sensex climbing back to the 50,000 level, many would be wondering if the markets operate in a different hemisphere oblivious to the ground realities in India. Clearly the market is sensing a victory for India in the coming months over tackling the second wave of the pandemic and expecting to see a robust and throbbing economy by December 2021. Like always, the market is forward looking, and presently it is looking way beyond the current corona virus numbers and the depressing situation.
Added to this, the global market rally, the stimulus-generated institutional money, broader markets’ marathon rally and the quality results’ season is leaving no stones unturned to spur our markets too. Inflation fears, at least for now, are overblown in my view. As the saying goes, let us cross the bridge when we reach it; we need not worry about inflation data and its consequent impact on interest rates as of now. The market is neither overbought nor oversold and it continues to be a stock-pickers’ market with odds clearly in favour of investors that are bullish and have a long-term perspective.
The exuberance in the market is palpable and best observed in the performance of BSE 500 stocks in 2021. As many as 228 stocks have generated more than 15 per cent returns on YTD basis alone with at least 10 stocks more than doubling and the top gainer, Adani Total Gas, recording gains of more than 200 per cent in 2021 alone. While experts may be cagey about the market valuation and prospects, one group of investors that is taking a bold view on the markets are the retail investors.
Retail investors realised something in the markets that none of the other market participants had the foresight to see. The participation in markets increased manifold for retail investors, and as a group retail investors were rewarded in tons with stock price appreciation. To understand this subtle and yet influential shift in market participation we have talked about the emergence of the retail investor as a talking point on Dalal Street. Will the participation increase in a similar fashion going ahead? Or is it a short-term blip leading to overreaction? Find out more in our cover story this issue.
Traders understand the importance of identifying the breakout levels and using them to be an extremely profitable exercise. However, not many know the intricacies of trading at breakout level. Our special story on this theme explains in detail the steps one should adopt while trading at breakout levels. I am sure you all will enjoy reading this story.
Our other special story throws some light on one of the most ignored aspects of equity analysis – ‘balance sheet’. A balance sheet is like a mole in an organisation that provides great insider views for investors. Most investors, however, ignore this important aspect of a company. Our story, hopefully, will change your perception about the balance sheet.
In my editorial written in the first week of April, I had clearly advised readers to invest in the coming 4-8 weeks’ timeframe. Seven weeks down, I am sure those that have already done so would be seeing their portfolios yielding decent returns. Those who sat on the fence and missed out should not lose hope and continue to invest in their portfolio even now. One should not worry about missing a 10 per cent lower price buying opportunity but rather should be concerned about missing the 30 per cent gain if they continue to wait for a bottom to be formed.
RAJESH V PADODE
Managing Director & Editor