The right strategy - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

The right strategy

Nov 14, 2003

The fall on the bourses yesterday has meant that the indices are marginally in the red for the week so far. With two days of trading remaining for the week (Saturday is a trading day this week), more profit taking cannot be ruled out. But is this a sign of things to come?The indices have continued to hold strong despite concerns about the fact that this strength may have come on the back of some operator driven 'hot money', which may flow out as soon as it has come in. The skepticism stems from the fact that it has happened in the past, and it is the retail investors who have been left at the short end of the stick every time the indices have surged.

While there is no doubt that the Indian indices were undervalued for quite some time and deserved to be re-rated upwards, the sharp rally have raised some worries. Thankfully, the buoyant Indian economy numbers as well as India's growing positive perception globally does offer a reasonable justification for the market upside. But as said earlier, have the Indian stock markets come up too far, too soon?

Well, at 16x trailing 12 months earnings, the NSE-Nifty has come up reasonably high. While some may argue that the global markets have received P/E's of over 25 and above over the years, so why not India? Nothing to dispute that! The only thing one worries about is that India is still a developing economy with an ever-increasing fiscal deficit. No doubt, India has a lot of growth potential, but we would be more comfortable if the rise was gradual and based on FY05 and FY06 visibility.

We believe that India, as one of the fastest growing economies in the world today, has the long term wherewithal to continually attract investments. However, investors entering the markets at these levels have to come in with a long-term growth vision (3-5 years), tone down their return expectations and adopt a staggered investment approach. Also, a good strategy in these uncertain times would be to stick with quality and not get sucked into rumours or hot tips. It is unreasonable to expect the markets to continuously zoom. At these levels, short-term mentality is unlikely to work and more often than not, investors will as usual end up at the short end of the stick.


Equitymaster requests your view! Post a comment on "The right strategy". Click here!

  

More Views on News

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Sundaram Bluechip Fund: Will Hold the Stable Horses (Outside View)

Sep 18, 2020

PersonalFn briefly outlines the newly launched NFO note HSBC Corporate Bond Fund.

Wait! Don't Chase Smallcaps Now (Profit Hunter)

Sep 18, 2020

Let the markets take a breather before you jump in.

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

A Contrarian View on Whether You Should Load Up on Small Caps podcast (Views On News)

Sep 17, 2020

Rahul Shah discusses whether the SEBI circular is the perfect time to start investing in good quality small caps

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 18, 2020 (Close)

MARKET STATS