Earnings, And Only Earnings, Will Drive Market Sentiments In Coming Quarters
Earnings, And Only Earnings, Will Drive Market Sentiments In Coming Quarters
Investors must be a worried lot at the moment as it is not at all comforting when one sees small-caps and mid-caps, which dominate an average individual investor’s portfolio, fall the way they have in CY18 on a YTD basis. I fully understand the plight of those investors who have seen wealth erosion in recent times. However, when I look ahead, I see opportunity knocking the doors of investors who have the conviction in equity as an asset class. The small-caps and mid-caps are getting more attractive and, sooner or later, they will catch the attention of the institutional investors, including the FIIs. Though the first half in CY18 has been difficult for aggressive investors, I think the second half in CY18 will be better and more promising. Sensex, in spite of several headwinds, may still make it to the 38,000 level by December 2018.
Investors should focus on those mid-caps and small-caps that have shown positive momentum in their earnings and yet the prices have dropped unreasonably. Many of the mid-caps and small-caps are available at reasonable valuations and investors can prepare a bucket list of stocks they want to accumulate and use the negative sentiment in the markets to buy them cheap. Remember, it is in tough times that opportunities for maximum wealth can be created.
The hardening interest rates in India will help the rupee to stabilise a little bit against the US dollar and eventually we can expect FIIs to invest more in debt markets. I expect the capital to flow into equities in the coming quarters and there is no signal as such in the markets which suggests investors need to be worried about the stability of the markets in the coming days.
The Q4FY18 results were mostly in line with our estimates. The cover story in this issue analyses the Q4FY18 earnings and also delves into the sectoral performances during the quarter. Providing a retrospective view as well as views on forward expectations, the story will aid the investors to create conscious investing strategies with fruitful sector-specific and stock-specific investments.
Markets do look to me to be range-bound. This trend, where the stock prices move within a range, may continue for a while. Investors ought to be prepared with the right strategies in such market environment. Our special story on the strategies to be adopted in a range-bound market should come in handy for those who want to remain active in a market environment which lacks a secular trend.
Amid a difficult market of 2018, the tyre stocks are emerging as reliable bets for the coming quarters. Even as investors are sceptical about the sector on account of the increasing crude oil prices and raw material costs, our special story explores the silver linings in the tyre industry and what might keep it thriving.
As always, I would like to request investors to remain cautiously optimistic on the markets. Be stockspecific, adopt bottom-up approach for investing, ignore the noise in the markets, focus earnings growth momentum and identify sectors that are promising to deliver above average growth. Remain diversified and invest in a staggered manner. Get rid of stocks that are poor fundamentally or have shown signs of poor corporate governance, as these may be punished further in the range-bound market scenario.
Stay tuned with us as the market is going to get exciting for all of us in the coming days !
Happy Investing !