Skip to main content

Time to go for value picks

Though the stock market is on a slide, disciplined investors need not worry if they go for value picks

The US bailout package was expected to cheer the market. Many investors were hoping that it may give a fillip to the market sentiments world-over. However, no such luck for investors on Dalal Street. Most market participants believe that foreign investors are likely to withdraw more money from the market. They also believe that the credit crisis in the US is far from over and it may soon lead to a global recession.

The bailout package is not the end of our woes It is still not clear what will happen next. Investors have to be patient for some time

So, are we really looking at the end of capitalism as some doomsday experts predict? Will the US financial crisis lead to a prolonged global recession? The economic slowdown in the US and Europe is a reality But to think that the stock market is never going to recover is illogical. The market will definitely rebound, but when that will happen is anybody's guess. The market may perk up for a day or two, but it is likely to see further lows as most people would try to sell their holdings at every upturn.

What do the experts think of the domestic markets? Do they believe the fundamentals are still strong to bet on? Of course, the valuations are compelling now, compared to what they were when the market was at its peak nobody is going to look at the ratios when there is uncertainty all over the world. However, there will be pleasant surprises in the next quarterly results. There is already good news on the inflation front. The drop in global crude prices and metals would drag inflation further down. Last week's data showed that inflation has fallen below 12 percent for the first time in two months.

What should be the strategy for individual investors? Experts are unanimous that you should book profits if you have invested in stocks directly and made some money on them. 'Sitting on cash' seems to be the way for many prominent market players. And they are waiting for a clear trend to emerge before returning to the markets. They say individual investors can also employ the same strategy. But there is one small hitch. These are for people who are confident of timing the market, which most know is a very difficult game.

That was for people who made some money on their investments. What about people who have made losses. Should they cut losses now? Most investment experts advise against cutting losses. If you have invested in quality stocks, cutting losses at this juncture would be a bad idea. The market is already down by over 40 percent since the last one year. It would be worth it to wait for a while. The same rule applies to mutual fund investors too. He bases his advice on the fact that the domestic economy still has potential and once the global financial woes settle down, we may see the market revival once again.

The same applies to investors who are investing in mutual fund schemes via the systematic investment plan (SIP). Stopping a SIP because the market is down defeats the whole purpose behind the idea of investing regularly. You are investing regularly because you don't want to time or take a call on the market.

Now, what about people who like to fish for attractive picks in a falling market? Investors should slowly accumulate large-cap stocks with attractive valuations. Foreign investors are selling large cap stocks due to the liquidity crunch. The trend is likely to continue. Investors should make use of the opportunity and pick stocks purely on attractive valuations. This strategy is for you if you have the patience to wait for at least one year, as the market is likely to be volatile in the next three to six months. What about people who are sitting on cash and would like to earn some money on it before investing in the stock markets on a regular basis?

Investors can park their money in liquid funds or floating rate funds and opt for a systematic transfer plan (STP) to invest in a well-diversified equity fund. They should look at the performance of the scheme in the last three to five-year period to choose a scheme.

Strategies for individual investors

• Book profits if you have made money on your investments
• Sit on cash and wait for a clear trend before re-entering the market
• Don't panic and cut losses if you have invested in quality stocks
• Don't stop your systematic investment plan
• Don't invest a lump sum amount as the market is likely to go down further
• Try to accumulate large cap stocks with attractive valuations gradually
• If you have large amounts to invest, park them in liquid or floating rate schemes and use the systematic transfer plan to get into the market
• Lastly, don't enter the market if you can't wait for at least a year

Popular posts from this blog

Jeevan Labh

 The Life Insurance Corporation of India has announced Jeevan Labh , its limited-premium, with-profits endowment plan .   It comes with a premium paying terms of 10, 15 and 16 years for corresponding policy tenures of 16, 21, and 25 years respectively. ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan Invest in Best Performing 2016 Tax Saver Mutual Funds Online Invest Online Download Application Forms For further information contact Prajna Capital on 94 83...

Liquidity Adjustment Facility

Liquidity adjustment facility (LAF) is a money market tool used by the central bank of a country (in India it is the Reserve Bank of India ), to infuse funds into the country's banking system when liquidity dries up. Again, in case there is excess liquidity, the central bank uses some tools to help banks manage their surplus liquidity. Usually the RBI uses the repurchase facility (called Repo ) to give short-term loans to banks to meet their temporary liquidity shortage. On the other, hand RBI uses reverse repo facility to help banks park their excess liquidity with it. Banks usually use various securities, which are approved by the RBI, as collateral when they take money from the RBI to meet their short term liquidity requirement     Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara...

Tata Dynamic Bond Fund exit load

Tata Mutual Fund has revised the exit load of Tata Dynamic Bond Fund to 0.50 per cent if redeemed on or before 180 days. Currently, there is no exit load. The effective date is March 25, 2015. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a missed...

Home Loans that Save Time and Money

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Home Loans that Save Time and Money  You can deposit surplus money in these special home loan schemes and reduce your loan tenure significantly in the process   IF YOU are thinking of taking a home loan and are confident of generating a surplus every month after paying the regular EMI, you can opt for loan schemes with an overdraft facility that not only cut interest payments significantly, but also reduce the loan tenure. State Bank of India, Standard Chartered Bank, HSBC and Central Bank of India offer such home loan products. Under the scheme, as a home loan borrower, you can deposit any surplus that you have into the home loan account, though you retain the option of withdrawing the sum, if required. By depositing an amount higher than your EMI , you save on interest outgo. The principal amoun...

BHIM App

What is BHIM? BHIM stands for Bharat Interface for Money , which is an easy way of transferring money from one bank account to an other via a smartphone using the Unified Payments Interface (UPI) platform . It is an instant payments application meant for sending money as well as requesting for payments. How is it different from UPI? BHIM is no different than UPI. But in the case of BHIM, customers don't have to download mobile applications of multiple banks, instead a single BHIM app downloaded from Android Play Store is sufficient. Other than that, payments can be made through a virtual payments ID or through account number and IFS code, same as UPI. What you need to use BHIM? BHIM can be used across an droid smartphones with version 4.0 and above, also it will be made available on iPhones and Windows smartphones very soon. Further, for feature phone users they need to use the USSD feature by dial ing *99#. Why was the need for BHIM felt when UPI is already in place? With various...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now