State of the market..

“1400 points down from the top” says a Moneycontrol headline. Is it meant to scare you or tell you, I do not know. When people tell me that they want to invest in equities, I tell them that they need to be prepared for 10% pull back, 20% correction, 30% deep correction and a 60% deep value buying opportunity. Most of them nod sagely. In this context let us UNDERSTAND that 1400 points on a 32000 index is less then a 5% FALL.

I also have started seeing people use the word ‘carnage’ for this fall last week or last 10 days. Hey baby you’ve seen no nothing yet!!!

This could be a minor bull market correction of the start of a deep fall – whatever it is, it has NOT EVEN STARTED.

Anybody can tell you that it was in June that the sensex was at 30000. Which means the market has given up the gains of July and part of August, THAT IS ALL.

If you are in the market and are planning to be a big player for a long period of time, you need to be prepared to be willing to see 25000 and perhaps 35000 in the next 12 months. Will 25k come first or will 35k come first should not matter.

Largely if you are a retail investor investing in mutual funds or direct equity what should you be doing?

  1. Stop watching the ticker channels and reading the pink papers
  2. Use your own brain and see which shares are worth buying
  3. Take concentrated bets on companies doing well – rather than sectors doing well
  4. It is difficult to understand most sectors – and pharma is a nightmare
  5. If you have your SIP and you have a 5 year horizon ATLEAST, keep going
  6. If you have a shorter time frame in which you need to stay invested, a SWP kind of withdrawal makes sense

If you are a direct equity investor..

  1. Buy a share because it is a well managed company, and YOU have earnings visibility
  2. If you like a sector, do a sip in a mutual fund instead of picking up companies at random
  3. Value buys will always be around – and in some cases the value can come from growth
  4. Sectors which are bleeding are difficult to make money, so the shares too may be difficult – Telecom, Pharma
  5. Some sectors like Real Estate are obviously bleeding more and will bleed longer
  6. BFSI is surely overpriced, but may stay there longer too

When you pick up shares do not worry too much about the industry. However, some industries like BFSI are in a state of euphoria and cannot go up too much. I mean the pe expansion and the EPS expansion in some of these industries are already captured to a great extent. Hence there is unlikely to be some ‘hidden’ gem in that sector.

I am not too much worried about the ‘market’ I do not know where it will go. I am still selling some over priced shares in my portfolio and buying shares which look attractive from a 10 year perspective. If it falls further, I will check my premises, but very likely to buy more of the same share.

Personally I like infra – but do not know what to buy. I am not so impressed by some of the Power company’s diversification, or even the highly lazy performance (rudderless?) of a Tata Steel.

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5 Responses to “State of the market..”

  1. 1400 of 32000 is 4.5% and not HALF A PERCENT

  2. Sir.. Please forgive.. but 1400 drop in 32000 index is almost 5% right and not half a percentage point? sorry if I misunderstood.

  3. 1400 is 5% of 32000 not 0.5

  4. i stand corrected…have made it 5%…

  5. Sir,,, I remember back in 2015 August, the market tanked 1400 points in one single day… And u said just do your SIP,,, thanks for hand holding in tough times.

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