Ed­i­tor’s Key­board

Dalal Street Investment Journal - - CONTENTS -

Iknow most of you must be want­ing to hear from me on “Which di­rec­tion will mar­kets take from here on”? Be­fore I even talk about where we are headed, do re­mem­ber I had said that the mar­ket, i.e Sen­sex may not fall be­low 31000 even when most of the an­a­lyst on the street pre­dicted a down­fall.

Mar­kets have a ten­dency to cor­rect and any correction is healthy for the mar­kets. Such bouts of cor­rec­tions are to be used op­ti­mally and it is in­deed in si­t­u­a­tions like th­ese that a savvy in­vestor ac­cu­mu­lates and makes fresh pur­chases.

What we have with us is a dif­fi­cult geopo­lit­i­cal sit­u­a­tion to deal with and a slow­ing GDP growth. Must say th­ese are two big walls of wor­ries that mar­kets have to scale. On the pos­i­tive side, we have abun­dant liq­uid­ity and an ever-grow­ing emerg­ing in­vestor class in the form of re­tail in­vestors. Re­tail in­vestors are par­tic­i­pat­ing in eq­uity mar­kets like never be­fore. Can say that the eq­uity cul­ture is fi­nally here to stay in In­dia.

In this is­sue, we thought we will cel­e­brate the per­for­mance of small-cap stocks. In­deed small-cap in­vest­ing is be­com­ing popular with the masses and there are mul­ti­ple op­tions avail­able for the in­vestors to in­vest in qual­ity small-cap stocks, mu­tual funds in­vest­ing in small-caps be­ing one of the popular op­tions. We bring to you fresh views from mar­ket ex­perts on small-cap stocks and why they think small-cap in­vest­ing will be a huge re­ward­ing ex­pe­ri­ence.

In­vestors should fo­cus on qual­ity small-caps with less amount of debt on the books and pay at­ten­tion to the qual­i­ta­tive as­pects such as man­age­ment qual­ity and cor­po­rate gover­nance. Money will be made in small-caps, we have no doubt and you should also have no doubts as well, on the po­ten­tial of small-caps. In this is­sue, we have come up with a fresh set of small-cap stocks as rec­om­men­da­tions.

Deriva­tives mar­ket is an­other area which is gain­ing pop­u­lar­ity and we are car­ry­ing an ar­ti­cle on ‘Best deriva­tives trad­ing prac­tices’ for the ben­e­fit of read­ers.

There are no ma­jor trig­gers for the mar­kets, how­ever, mar­kets will start dis­count­ing earn­ings for com­ing quar­ters and mar­ket par­tic­i­pants will re­act to the in­fla­tion data and start dis­count­ing in­ter­est rate cut sce­nar­ios as well. May be there will be at least one small rate cut be­fore the bud­get ses­sion even as the pol­icy mak­ers strug­gle to put In­dian econ­omy on a faster growth tra­jec­tory.

Some­one rightly said that “In­dia is like a house that is un­der­go­ing ren­o­va­tion”. We will have a bet­ter­look­ing In­dia in 6 to 9 months from now. With bet­ter eco­nomic prospects, the stock mar­kets can only take one di­rec­tion, that is, up­wards. Till that time mar­kets may trade range­bound with a pos­i­tive bias.

Stay in­vested and in­vest in a stag­gered man­ner.

V B PADODE Ed­i­tor-in-chief

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