There is a saying: Bull markets can climb the wall of worry. That’s exactly what is playing out in the Indian markets right now. The Sensex seems disinclined for a pause, which does not mean it’s immune to surprises. The investors, as usual are ignoring the dark side of dipping their hands into rich valuations. Many of them are new to the galleries, driven to the ring due to invisible avenues of alternate investments.
The Fixed Deposit rates are at the lowest point and are expected to move further southwards. The appetite for Real Estate has withered away along with the high value denominating notes. Gold is just not willing to wink. Ignore the temporary craze due of Kim. These factors are driving even a newbie to the Exchanges assuming that this money making machine would never go for a maintenance halt.
After reading the above you may declare that I Am forecasting hell to fall loose, no I Am just cautioning the investors not to go on rampage. Keep in conscious that the higher you buy the lower tends to be the returns with high stakes. Hence we should welcome if market decides to cleanse some froth before the next move.
Valuations of most mid and small cap companies are running high. The flush of liquidity is helping them sustain. But as I said before, I Am not advocating a sell. But a churn in your current portfolio by reducing the overall standard deviation can buy you insurance against any rude shocks.
Can rude shocks strike? Yes there are many probable events, and in case such things happen, we would see value buying emerge. Not just Indian markets, the global indexes are performing well. Hence look at sectors and companies which are seeing order book build-up right now, but are also out of market flavour.
Most of us must be thinking that, on ground nothing seems to be happening. Markets are much smarter than all of us. They see what is coming and not what is. One of the examples of this is in the Global PMI numbers. Have a look:
Most developed nations are showing or have started showing dark patches of green. Most nations in the emerging markets section have also started showing patches of yellow and green, a welcome shift from the red ones. The valuations in the current market are not uniform, one can identify underdogs even now. Don’t risk buying stocks without an advisors assistance. People tend to buy stocks and invest in Mutual Funds on their own without any clue when to jump out of them.
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