Ed­i­tor’s Key­board

Dalal Street Investment Journal - - CONTENTS - V B PADODE Ed­i­tor-in-chief

Another in­ter­est­ing phase in eq­uity mar­kets is fac­ing us where the Sen­sex seems to have lost its mojo – tem­po­rar­ily- and has slipped the most in last seven months.

The other emerg­ing mar­kets are avail­able at a steep dis­count to In­dian eq­ui­ties and FIIS are seen with­draw­ing funds from In­dia and de­ploy­ing the cash in rea­son­ably val­ued emerg­ing mar­kets. I doubt if they can find same qual­ity as In­dia has got to of­fer. In­dian mar­kets have al­ways en­joyed a pre­mium to its peers and I know of no rea­son why the pre­mium should di­min­ish. It is just that In­dian eq­uity mar­kets is faced with slug­gish earn­ings growth for some quar­ters now and the econ­omy is faced with some teething GST prob­lems. Th­ese very as­pects can re­verse quickly and you will see the same FIIS de­sert­ing In­dia now com­ing back to in­vest in the In­dian mar­kets with larger sums of money.

While cor­rec­tion is al­ways con­sid­ered healthy in a bull mar­ket as it al­lows in­vestors who are sit­ting on side lines to en­ter the mar­kets, in­vestors should start iden­ti­fy­ing in­vest­ing op­por­tu­ni­ties with­out any reser­va­tions on the long-term po­ten­tial of the mar­kets. Don’t for­get, th­ese days stock prices cor­rect sharply and re­cover sharply as well.

Mar­kets will start fac­tor­ing a rate cut pos­si­bil­ity soon. Var­i­ous mea­sures are ex­pected to be taken by the cur­rent gov­ern­ment to boost the GDP growth and a rate cut an­nounce­ment from RBI is some­thing mar­kets will cheer with lot of en­thu­si­asm. All eyes will be set on the Fourth Bi-monthly Mone­tary Pol­icy meet­ing for 2017-18 sched­ule on Oc­to­ber 3 and 4 next week.

In this is­sue we have dis­cussed about the IPO per­for­mance in 2017 at large and have an­a­lysed the pros and cons of IPO fund­ing. CY17 has been ex­cep­tional in terms of list­ing gains for IPOS. Bull mar­kets usu­ally at­tract lot of new IPOS and the trend is ex­pected to con­tinue where we will see lot more com­pa­nies hit­ting the mar­kets.

We also talk about pa­per stocks in our spe­cial re­port and have hand-picked some of the pa­per stocks that may do well in com­ing year or so. Do make the most of the rec­om­men­da­tions and in­clude them in your port­fo­lio for di­ver­si­fi­ca­tion ben­e­fits. As the mar­ket val­u­a­tions is high with the key bench­mark in­dex Sen­sex trad­ing at a P/E mul­ti­ple of ~23.4 we be­lieve in­vestors should get out of cer­tain lan­guish­ing stocks and use the pro­ceeds to buy growth stocks. Do have a look at the stocks we feel in­vestors should exit in cur­rent mar­ket sce­nario.

With all the cau­tion that in­vestor may adopt in the cor­rec­tive mar­ket, one must re­mem­ber that there are tremen­dous op­por­tu­ni­ties in ac­tively man­ag­ing the port­fo­lio. We have some­thing in­ter­est­ing for you in our ‘Ex­pert speak’ col­umn in this is­sue which will put to rest your doubts on ac­tive Vs pas­sive port­fo­lio man­age­ment.

Buy on dips is still rel­e­vant in cur­rent mar­ket and one must take note that the In­dian mar­kets have had a straight seven-month dream run where the stock prices kept on ris­ing. A cor­rec­tion is war­ranted at this junc­ture and is ac­tu­ally healthy for the mar­kets. Do not panic. Hold on to your high con­vic­tion stocks, get rid of your low con­vic­tion stocks and start iden­ti­fy­ing your next favourites.

Stay safe. In­vest in stag­gered man­ner. Longer term up-trend is very much in­tact.

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