Not All Stars are Equally Bright

Posted On Tuesday, Jul 24, 2018

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The Sensex hits a record high closing at 36,825.

The above line is seemingly a new normal for financial news portals and papers alike. At the time of writing this article the S&P BSE SENSEX stood at 36,825 levels. However, all investors are not happy with this news. More than 300 stocks on the BSE hit a fresh 52 week low as on today, 24 July when market is on a record high. Investors who have invested in stocks which hit 52 week low are indeed not happy with market all time high performance. What is missing? How are they missing out on this rally? Why markets are at all time high?

Factors driving India’s stock market upwards

There are many factors responsible for record high for Indian markets. First, sharp fall in crude oil prices was a huge boost markets, at the time of writing this article Brent Crude oil price hitting $ 73.19 per barrel from $76.74 seen in the first week of June 2018. Fall in oil prices is good news reduces pressure on import bills and eventually pulls inflation down. India relies more than 80 per cent on imports to meet its oil needs. Oil and Gold are major items in India’s import bill. Recovery in the Rupee vs the US Dollar is an added advantage. A strong Rupee reduces pressure on import bills. Above all, market is expecting good earnings (Q1 Results) from listed companies. All these factors are enhancing optimism for markets which push markets to a new high.

Relook at Your Portfolio

If you seem stuck with stocks that are hitting fresh 52-week lows on a daily basis than your portfolio might need a relook!

That is one of the pitfalls of investing in the market directly, without adequate research. Before investing stocks and companies need to be thoroughly investigated and read up on. Not only do the numbers need to be understood and crunched but also the softer aspects of the company need to be looked at. Who are the promoters? What is their vision for the company say 10 years down the line? How do they treat minority shareholders? All of these aspects need to be gauged and then a conclusion reached of whether to invest or not.

Most of us do not have the time to do this -the solution – Equity Mutual Funds!

Investment in mutual funds is one of the best professional modes of investments. Professional fund manager tracks markets every day along with small cap, mid cap and large caps stocks. The opportunity to miss that gem of a stock is less here.

INDEXJan-18Jul-18Change %
S&P BSE SENSEX35,965.0236,718.602.10
S&P BSE Small Cap18,716.7715,867.21-15.22
S&P BSE Midcap17,364.2015,392.58-11.35
Period : Jan 18 to Jul 18,2018
Source-https://www.bseindia.com/indices/indexarchivedata.aspx

A professional fund manager has various tools to find real stars (stocks) for you which have a potential to grow over the long term.

Look at More than Just the Index

Don’t look only at index movement. As you can see in the above table BSE top 30 stock performed well however growth movement is not visible in mid cap as well as for small cap stocks. It can be opposite in future. It’s not only difficult to predict what will drive markets but also the direction which they will take. However, with high professional skills, experience, Fund Managers are in a much better position than average retail investors.


Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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