Ed­i­tor’s Key­board

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

It’s ex­actly one year since de­mon­eti­sa­tion and look where In­dian eq­uity mar­kets are poised cur­rently. Who would have thought post-de­mon­eti­sa­tion Sen­sex would notch up an im­pres­sive gain of 20 per cent? In fact, 21 out of 30 Sen­sex stocks have gained more than 20 per cent since de­mon­eti­sa­tion, while the heavy-weight RIL has gained nearly 87 per cent to emerge as the top Sen­sex gainer. What has sur­prised me is the per­for­mance of the re­alty in­dex since de­mon­eti­sa­tion. Re­alty in­dex is up by nearly 76 per cent, while Metal in­dex is up by 42 per cent even as Oil & Gas in­dex gained 37 per cent and Bankex was up by 28 per cent.

De­mon­eti­sa­tion has been a boon for eq­ui­ties. Mu­tual fund in­dus­try has been one of the big­gest ben­e­fi­cia­ries of de­mon­eti­sa­tion and we have seen record amount of money flow­ing into eq­uity-ori­ented mu­tual funds in the past one year.

Right now, it is pos­si­ble that mar­kets will cor­rect a lit­tle bit. Such cor­rec­tions keep the mar­kets healthy and are a must in any bull mar­ket. Hav­ing said that, there is noth­ing in the mar­kets right now that sug­gests an im­mi­nent ma­jor cor­rec­tion that in­vestors should be wor­ried about. In­vestors can stay light and be less ag­gres­sive at the cur­rent mar­ket val­u­a­tions. Try to iden­tify stocks which of­fer some mar­gin of safety.

When mo­men­tum is strong in the mar­kets, be it up­ward or down­ward, mo­men­tum in­vest­ing is the best strat­egy to adopt for those with some dash of risk ap­petite. In our cover story, we have dis­cussed in de­tail the pros and cons of mo­men­tum in­vest­ing. Also, we have shared our top mo­men­tum picks for this is­sue which we think may beat the mar­kets.

In one of our spe­cial sto­ries, we have termed ‘port­fo­lio weight­ing strat­egy’ as cru­cial for bet­ter per­for­mance of port­fo­lio of stocks. I am sure the in­puts shared in the ar­ti­cle will help in­vestors in­vest smartly and give de­serv­ing at­ten­tion to how much weight an in­di­vid­ual stock should be as­signed in the port­fo­lio. De­ter­min­ing port­fo­lio weigh­tage for in­di­vid­ual stocks sci­en­tif­i­cally is the key to port­fo­lio per­for­mance. The avi­a­tion mar­ket in In­dia is wit­ness­ing a surge in de­mand and this de­mand-driven growth is cre­at­ing some in­ter­est­ing in­vest­ing op­por­tu­ni­ties in the air­line sec­tor in In­dia. Our spe­cial re­port on avi­a­tion mar­ket in In­dia talks about the in­vest­ing op­por­tu­ni­ties in the sec­tor.

Var­i­ous gov­ern­ment ini­tia­tives and steps taken to build in­fra­struc­ture in In­dia, along with the im­prove­ment in cor­po­rate earn­ings this quar­ter, are keep­ing the mar­kets in good mood. I think the econ­omy will be on a roll by March 2018 and it may touch 7 per cent GDP growth once again and by 2019 we should see GDP growth touch­ing 8 per cent. In­dia is ready for a change and is seen em­brac­ing dig­i­tal pay­ments in a big way. Since de­mon­eti­sa­tion, the us­age of dig­i­tal pay­ment sys­tem has in­creased sub­stan­tially and this ac­cep­tance of dig­i­tal pay­ment tech­nol­ogy na­tion­wide, along with GST, will help push growth in the for­mal econ­omy in In­dia.

With great days ahead for our vi­brant econ­omy, eq­ui­ties will re­main the flavour of the sea­son for the in­vestors, even if there is rel­a­tive in­crease in volatil­ity in the stock prices. So, fo­cus on high con­vic­tion stocks that are not over­val­ued at this point of time.

In­vest smart – in­vest long term!

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