Broader Indices: Momentum To Continue, Not To Get Complacent!
“New Year’s most glorious light is sweet hope”- Mehmet Murat ildan. We hope you recollect what we had mentioned in our previous editorial about sweet hope for recovery in the broader markets i.e. mid and small-cap indices. The Nifty has not done much as it has seen oscillating in a range, however, action lies in the mid and the small-cap stocks. These indices have beaten the Nifty in the past five sessions. While Nifty Mid-cap has risen 3.12 per cent in the past four sessions, the Nifty small-cap index has surged 4.89 per cent during the same period. The rally in the broader markets can be attributed to two developments, first one would be Net Asset Value (NAV) propping out of mutual funds and fund managers, as this will help reduce the losses, since the mid-cap and small-cap indices have suffered in the calendar year 2019. And secondly, there is a speculation that the list of stocks, which have been classified as large-cap, mid-cap and small-cap would be re-looked at by SEBI in the coming days. Whatever be the eventual outcome of such a review would be highly speculative, but the street believes that the mid and small-cap stocks would get an advantageous term.
The last quarter of CY 2019 saw a number of press conferences conducted by Finance Minister to bolster sagging economy. Not only this, the FM closed 2019 with a bang, announcing National Infrastructure Pipeline (NIIP) worth Rs 102 lakh crore over the next five years. The massive spend is to take the country into the elite league of US$ 5 trillion economies by 2025. Meanwhile, the GST revenue collection remained above Rs 1 lakh crore mark for the second month in a row with December number rising to Rs 1.03 lakh crore.
For US markets, 2019 turned out to be a marvellous one with the Dow surging about 20 per cent and the techheavy Nasdaq jumping about 33 per cent for the year. US President Donald Trump ended CY 2019 with a positive announcement as he said that he will sign an initial phase on trade agreement with China on January 15.
The start of the New Year is a perfect occasion to make investment resolutions and create wealth. Regardless of whether you are an experienced investor or beginner, the start of the New Year is altogether a perfect time to make stock market resolutions and take better-investing decisions. One of the common mistake people commit in the stock market is that they rely on herd mentality for their investment decision; hence, the first and prominent thing is that investor should do all homework along with a rigorous analysis before taking up a position in a stock. Secondly, an investor should make a habit of investing on regular basis; he/she should not try to be genius by timing the markets. This point is perfectly put up by the investing legend Peter Lynch, when he said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” And finally, one of the most indestructible sayings on Street is “Cut your losses short and let your winners run.” Wise advice, but many market participants still happen to do the inverse, booking out profits after minor gains only to watch them moving higher, or holding a stock with a loss, only to see things getting worse. Sticking to the above mentioned rules and discipline will help you out to make your investing journey a pleasant one and achieve your financial goals.
Looking at the current scenario, we would recommend readers to concentrate on the broader market stocks as the real action is seen in these stocks and momentum is likely to continue in these stocks. Why argue against what the market is telling you through price action? Just hop and ride till the wheels fall off, then rotate into the opposing direction when bears get resurrected again by breaking support decisively.
