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

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 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]
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