Pankaj Karde

Head- In­sti­tu­tional Sales & Sales Trad­ing Sys­tem­atix shares

Dalal Street Investment Journal - - COVER STORY -

In this mar­ket, not all un­der­per­form­ing stocks are bad

Most re­tail in­vestors tend to stick with un­der­per­form­ing stocks and book prof­its in out­per­form­ing stocks. In your ex­pe­ri­ence, what is the right exit strat­egy when it comes to un­der­per­form­ing stocks?

In terms of un­der­per­form­ing stocks, one should first find out rea­sons for un­der­per­for­mance. If the com­pany has is­sues within and there are is­sues with growth in the com­pany, it is best to book your losses and look at in­vest­ing in com­pa­nies with high growth and bet­ter fi­nan­cials. But if you think that the com­pany is a slow-mov­ing stock with good fun­da­men­tals, hold on. The stock will give sta­ble long term re­turns

What is the best way to deal with un­der­per­form­ing stocks in cur­rent mar­ket en­vi­ron­ment?

As men­tioned above, good com­pa­nies, although un­der­per­form­ers, should be held on to. In this mar­ket, not all un­der­per­form­ing stocks are bad.

Why do in­vestors in gen­eral find it dif­fi­cult to book losses and move on?

Greed and fear. In­vestors in gen­eral find it dif­fi­cult to book prof­its as well as losses. There is lack of dis­ci­pline among in­vestors and hence they find it dif­fi­cult to move out. If you fol­low a prin­ci­ple of strict stop loss, exit would be eas­ier.

What is your out­look on the mar­kets in gen­eral and where do you see (sec­tors) un­der­per­for­mance in the mar­ket?

I feel that the mar­ket is flush with liq­uid­ity. The domestic as well as for­eign in­sti­tu­tions are very bullish on In­dia. In such a sce­nario, we will see short term cor­rec­tions in stocks and in­dices, which would be used as buy­ing op­por­tu­ni­ties. Domestic con­sump­tion theme would con­tinue to do well, ir­re­spec­tive of their high valu­a­tions. Sec­tors with high ex­port de­pen­dence such as IT and pharma would un­der­per­form. Although pharma may see some value buy­ing, in broader mar­ket range, it would un­der­per­form.

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