Patience is a Virtue, Play it for the Long Haul

There is only one cardinal principal in the equity market that helps you to make money. You buy low and sell high. The simpler it sounds, the harder it is to practice. The market is too complex and mischievous. This is what makes it difficult for anyone to understand it and predict its behaviour with certainty. And this becomes even more important currently as there are discussions about India being on the verge of slipping into bear territory. We are already down by 15 per cent from the recent peak reached in the month of October 2021. The last eight months of volatility in the market might have taken its toll with the patience of many investors stretched to the limit.

Experience shows that if you can hold on to your emotion of getting rid of your investments now, you will reap huge benefits of this going forward. Our analysis shows that the annualised return given by the Sensex since its inception is 15.02 per cent. So, every investment of Rs1 lakh investment would have become Rs4.24 crore now. If you were out of the market for a single day on May 18, 2009 when the Sensex saw its highest single day gain, your Rs1 lakh investment would have been just Rs3.61 crore, lower by Rs62.76 lakhs. If you missed only the top five best performing days of the Sensex, your investment value would have been almost half of the original investment value compared to having remained invested in the market.

In addition, these best days have normally come in the early days of a bull run. Hence, digging your heels and staying put in the market is the best strategy you can adopt as of now. The current issue is one of the most awaited one as it covers in detail the financials of the top 1,000 companies. More importantly, we provide an insight into the various sectors. This should help the readers to hunt deep bargain opportunities in the current scenario. In the cover story of this issue, we have discussed the various risks that are faced by the markets at this point of time, including the possibility of a recession in the US markets. The equity market is always difficult if you have a short-term investment horizon.

The moment you are ready to bet on your high conviction stocks and have the patience to wait it out, there can be no better asset class than equity. In India we may not enter a recessionary environment but a slowdown in economic growth is a possibility. Hence, for the interim it may make sense to construct a portfolio of resilient stocks that can limit the downside. There a strong case emerging for some portfolio allocation in the pharmaceutical stocks. The pharmaceutical sector has underperformed, and profits have been growing for the sector. All in all, stay true to the equity class, play it for the long run, take support of defensive stocks and let the short-term turmoil not bother you. We are with you always!

RAJESH V PADODE
Managing Director & Editor