Sailing on Cloud Nine
The equity market’s Herculean performance is unnerving even the best of the bulls. In the meantime, experts are cautioning investors to tone down their expectations on future returns and shift to large-caps which are considered relatively safer and less volatile. Foreign portfolio investments (FPIs) seem to suggest that the Indian markets can go higher from the current levels as indicated by their appetite for Indian equities. Globally, the markets are seen rallying as the fear of tightening by central banks seems to be dying down. The technology stocks are supporting markets in the US with NASDAQ trading at record highs.
Many would argue that IT stocks could be in an overbought zone after a stellar rally. Let me remind you: its ‘digitise or die’ kind of situation for the global economy. The single most important sector that can potentially be the beneficiary of this secular trend is information technology. Remain invested in IT stocks and for a change be willing to pay a slight premium for quality IT stocks as the outlook remains bright for the foreseeable future.
Apart from the IT sector, the specialty chemical space continues to attract long-term investors as the story of ‘China Plus 1’ gets real. The textile sector is abuzz with a lot of action these days with the right kind of announcements from the textile minister helping the sentiment improve in the industry. The targeted and focused policy approach by the current government, which sounds and looks more business and market-friendly these days, is creating myriad opportunities for equity investors who can distinguish the obvious solid long-term opportunities from the ephemeral ones.
The trick is to identify the long-term sectoral trend. Once the sectoral trend is identified, market outperformance is natural. Talking about market outperformance, mid-caps are clearly outperforming the markets in 2021. Our cover story not only talks about the top performing mid-caps but also discusses the reasons why one should invest in mid-caps. This issue is a special mid-cap issue where we have also published a list of top-ranked mid-caps based on different qualitative and quantitative aspects. Do gain insights from the cover story and the special edition focusing on mid-caps and let us know how the information has helped you in any way.
When investors check the health of any company, promoter pledging is one of the essential factors that often gets missed. In our special story we have explained in detail why tracking promoter pledging is important and how the stocks with high promoter’s pledging have performed on the bourses. As Mukesh Ambani, India’s richest industrialist, inches closer to gain entry into the club of USD 100 billion with RIL trading at record highs, I am sure many of us are experiencing record growth in portfolios. The point I am trying to make is that the current equity market rally is creating a serious amount of wealth for maximum number of investors and hence deserves the required attention.
However, we are also aware that what goes up is also likely to come down some day. The bullish euphoria tends to make one forget that there are two sides to the same coin. For the majority, playing a little safe at this juncture appears to be a prudent move. Continue to book profits and move your investments into large-cap stocks. Always remember that slow and steady wins the race. Rome certainly wasn’t built in one day and so do not expect to become ten-fold wealthier overnight. Selling is also as important as buying. Keep greed at bay and don’t get swayed by temporary and misleading populous excitement. Stay tuned to your favourite magazine to remain updated with the most deserving candidates for your portfolio.
RAJESH V PADODE
Managing Director & Editor