There is vis­i­ble pain in tele­com and power sec­tors. Tanay Loya and Neerja Agar­wal ex­plain why one should stay away from th­ese sec­tors and also iden­tify which stocks to avoid from th­ese two sec­tors.

Dalal Street Investment Journal - - SPECIAL REPORT -

The In­dian eq­uity mar­ket trad­ing close to record highs is keep­ing re­tail in­vestors in­ter­ested in the mar­kets, de­spite dizzy val­u­a­tions. There is no doubt that the In­dian mar­kets are trad­ing at above av­er­age his­tor­i­cal val­u­a­tions.

Although the ma­jor bench­mark in­dices gained nearly 2 per cent in the cur­rent se­ries wit­ness­ing good amount of long ad­di­tions, strong hands seem to be pes­simistic and re­mained net sell­ers in the cash as well as de­riv­a­tives mar­ket. The sell­ing from the FPIS is partly negated due to strong buy­ing mo­men­tum from the DIIS and re­tail in­vestors.

In such a mar­ket en­vi­ron­ment, where val­u­a­tions are stretched and in­di­vid­ual stocks are show­ing lot of pos­i­tive trac­tion, there are very many stocks that are lan­guish­ing and de­serve no place in the port­fo­lio in the cur­rent mar­ket sce­nario. Th­ese lag­gards need to be sold and the money so en­cashed can be op­ti­mally used to add on to stocks that are ex­pected to do well.

Af­ter scan­ning var­i­ous sec­tors, we find that tele­com and power sec­tors are the two sec­tors hav­ing in­her­ent prob­lems and may strug­gle to grow. Th­ese two sec­tors may dis­ap­point in­vestors look­ing for growth.

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