Playing The Stock Game
Experts say we are in the early stages of a bull run. We tell you how you can make the most of it.
- Oct 29, 2016,
- Updated Nov 17, 2016 10:58 AM IST
Every Diwali, we ask our favourite stock analyst one question: what is the outlook for the next Samvat? And every year, we muddle through a half-baked projection that has equal chances of being a hit and a miss.
So, let's see what analysts are predicting for the next year. But wait! Does it matter? Not really, say some of the world's best investors - as your returns will not depend upon your playing or not playing the numerical guessing game but on how well you manage risks while investing your money. Markets, they say, will keep moving up as well as down, and second-guessing their movement is well nigh impossible. The only thing an investor can do is to keep risks under control while going for the best possible results.
"It is the nature of markets to be volatile; you can't avoid that. One must learn to stomach volatility and focus on avoiding risks. This is what all great investors do," says Dhananjay Sinha, Head of Research, Economist & Strategist, Emkay Global Financial Services.
So, while markets take cues from domestic and global factors over the coming months, should the retail investor be biting his nails, folding up his portfolio or getting ready to roll the dice? Nilesh of Envision Capital says the market has not topped out yet and there is a lot of room for earnings to grow.
This time, though, the rally does not look to be sector-specific. There is disruption happening in most sectors and one needs to pick companies that look likely to benefit from the growth in the economy. Bharat Iyer of JP Morgan says, "Most segments should do well given the expected pick-up in the economy. But a few themes stand out. Urban consumption should benefit from the implementation of the 7th Pay Commission recommendations."
"Financials should benefit from falling interest rates, though one still needs to be a tad selective in the backdrop of credit cycle-related issues," he says.
Dhananjay Sinha of Emkay says, "A rate cut will be positive for banks but for investors in banking stocks return on assets has diminished. Rather, companies engaged in capital goods and consumer durables should be the ones that investors must watch out for."
Given the attractiveness of broad sectors related to urban and rural consumption - FMCG, telecom and data, infrastructure, consumer durables and some mid-cap realty stocks are good places to invest due to their linkages with India's economy. However, a close study of valuation is imperative. While you mitigate risk and ride the volatility, get ready to expand your equity allocation.
Every Diwali, we ask our favourite stock analyst one question: what is the outlook for the next Samvat? And every year, we muddle through a half-baked projection that has equal chances of being a hit and a miss.
So, let's see what analysts are predicting for the next year. But wait! Does it matter? Not really, say some of the world's best investors - as your returns will not depend upon your playing or not playing the numerical guessing game but on how well you manage risks while investing your money. Markets, they say, will keep moving up as well as down, and second-guessing their movement is well nigh impossible. The only thing an investor can do is to keep risks under control while going for the best possible results.
"It is the nature of markets to be volatile; you can't avoid that. One must learn to stomach volatility and focus on avoiding risks. This is what all great investors do," says Dhananjay Sinha, Head of Research, Economist & Strategist, Emkay Global Financial Services.
So, while markets take cues from domestic and global factors over the coming months, should the retail investor be biting his nails, folding up his portfolio or getting ready to roll the dice? Nilesh of Envision Capital says the market has not topped out yet and there is a lot of room for earnings to grow.
This time, though, the rally does not look to be sector-specific. There is disruption happening in most sectors and one needs to pick companies that look likely to benefit from the growth in the economy. Bharat Iyer of JP Morgan says, "Most segments should do well given the expected pick-up in the economy. But a few themes stand out. Urban consumption should benefit from the implementation of the 7th Pay Commission recommendations."
"Financials should benefit from falling interest rates, though one still needs to be a tad selective in the backdrop of credit cycle-related issues," he says.
Dhananjay Sinha of Emkay says, "A rate cut will be positive for banks but for investors in banking stocks return on assets has diminished. Rather, companies engaged in capital goods and consumer durables should be the ones that investors must watch out for."
Given the attractiveness of broad sectors related to urban and rural consumption - FMCG, telecom and data, infrastructure, consumer durables and some mid-cap realty stocks are good places to invest due to their linkages with India's economy. However, a close study of valuation is imperative. While you mitigate risk and ride the volatility, get ready to expand your equity allocation.