Indian Markets Resilience Is Comforting
A midst the turbulent global equity markets, the Indian market is showing signs of stability and calmness. Agreed, the stock prices are not going higher, but the prices are not falling either, as they are in other emerging markets, including China. The key benchmark index is down by merely 1,000 points from its all-time high of 36,443, which to my mind is no big deal. This fall of 1,000 points in Sensex is despite the relentless selling by the FIIs in the Indian markets. The FIIs have sold close to Rs 20,400 crore (net) over the last three months (AprilMay-June) and yet our markets have absorbed such selling pressure as if it was a non-event. My point is that the Indian markets are reflecting remarkable resilience, which is a proof that the overall condition of the economy is steady.
Markets may remain sideways for a few more months. Such sideways markets are often difficult for both traders and long-term investors, as during this phase, investors tend to lack confidence. But, in my view, sideways markets present an ideal opportunity for accumulation of quality stocks. Any dip in the stock prices can be used to accumulate the stocks that are already in your buy list. There are visible headwinds for the markets in the form of the upcoming state elections and ongoing global trade war, but I expect the inflows into equities to remain healthy. Also, looking at the resilience of the Indian markets, the FIIs may reverse their outflows, which will be great for the stock prices.
Our current issue is a special one, wherein we have analysed a total of 24 sectors and have highlighted the performance of top companies within each of these sectors. In total, the financial data of top 1000 companies by market capitalisation is shared in the issue for your benefit. I hope you all get good insights into each of these sectors and the highlights on sectoral performance prove to be handy.
The cement and textile stocks have underperformed the markets hugely in the last six-odd months. Many of these cement and textile stocks are touching their fresh 52-week lows and, in our view, these stocks are close to bottoming out. We recommend investors to hunt for quality cement and textile stocks that are trading at discount to their intrinsic value.
Also, we find that the pharma sector has already bottomed out. The stock prices of pharma companies are merely reflecting the improving fundamentals. For those who are still not convinced about the future potential of the pharma stocks, I suggest they should have a look at our special story on the pharma sector. The sector is indeed reviving.
Going ahead, the markets will start reacting to the earnings, but will also remain cautious ahead of the state elections. Our markets are sensitive to the political developments and may react in a volatile manner as the event approaches. Long term investors can grab this opportunity with both hands in case the stock prices fall to attractive levels.
Patience is the key in a market where the stock prices are not going anywhere. Don’t buy stocks of companies having leveraged balance sheets or companies that operate in sectors that are struggling to grow. Remember to stay diversified and to remain invested all the time. Don’t attempt to time the market, but always be on the hunt for quality stocks.
Stay in touch with your favourite magazine as the market promises to get interesting in the coming days.