Traders should adopt “Hit and Run Gorilla Trades” which means
they should not take overnight positions, should respect the intraday trend and
square up their positions in a day itself.
Benchmark indices have
fallen more than 20%g from their respective record highs registered in
January effectively placing the Indian market in a bear phase.
The first thing which
one should understand is not to be under an illusion that they can time the
market. Yes, the way this can be done is to deploy cash in markets in a
staggered way.
“In this sharp
decline, we are suggesting our clients begin their investments in quality
stocks with 20-25% of their investment corpus designated for the equity
asset class and infuse their capital slowly in the next 2-3 installments
whereas traders should still remain cautious as market volatility will remain
an intact cause of coronavirus crisis.
The next question is
how can one look at picking stocks? There will be a lot of beaten-down stocks
that might be looking attractive from a price perspective, but are all of them
a good buy? History, suggest otherwise.
The idea is to invest
in stocks that have strong fundamentals because most of the decline is largely
due to external factors. To start with, investors should analyze the core the business of the company, balance sheet, profit, and loss statement, and
valuations such as EPS, PE, ROCE as all these factors indicate the health of
the company.
“Though there are many
strategies to invest or select stocks, one should have a mix of value and
growth stocks while constructing a portfolio.
“One can select stocks
where the fundamental growth is consistent and the long-term business prospects
are fairly decent. Also, many high dividend-yielding stocks are available at
relatively cheap valuations which can also add value in the long run.
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