A missed opportunity!

Indian equity markets are riding high after witnessing a sharp decline in March 2020. The current rally is being considered as a missed opportunity. Stocks fell as much as 40 per cent from January high in March and gain nearly 60 per cent till July.

A question that arises here is, can we really count this fall and rally as a missed opportunity? Somehow, counting the stocks which gained since March, would certainly give such a feeling.

The top 1,300 companies (in terms of market cap) have surged 64 per cent on an average. These stocks include market leaders such as Reliance Industries Limited (RIL) to names like Sintex Plastics Technology.

The gains noted by a few scrips such as Opto Circuits (India), Alok Industries, McLeod Russel India, Reliance Infrastructure and Power, Jain Irrigation, Borosil Renewables, Viceroy Hotels, etc. gained more than 200 per cent. All these names listed here were undergoing several issues much before the pandemic started. They had lost nearly 90 per cent of the when compared to 2017 highs. This clearly suggests that gains are due to low price availability after the pandemic selling. Overall, though this gain might look good, its quality still raises doubts.

On the other hand, March fall this year was participated by more than 1,000 stocks. Nearly every BSE-listed stock fell in double-digit per cent. As these stocks were available at cheaper prices, the buzz in the market was to accumulate them. As soon as the markets started rising, a feeling of missed opportunity felt its presence.

Now, just ask yourself that can you buy 1,000 stocks even if they are down by 40 per cent? The answer in most cases is likely to be ‘no’. This may be because of the lack of capital with retail participants, sentiment ridden by confusion over a pandemic, fight between fear and greed, etc.

One should focus on the way ahead rather than looking at what happened in the past. Markets are here for a long time and thinking over what happened, would add more to the agony of the retail investors. Retail participation has already increased in the market during the pandemic. They should be aware of the gains and ‘quality’ of gain.