Don’t Be Scared – Nibble On Stocks: Shankar Sharma

Shankar Sharma’s favourite stock Tata Motors, which forms the core of his multi-bagger portfolio, tanked nearly 8% on Wednesday on news that its sales of Jaguar Land Rover had, on a Q on Q basis, dipped and that the dire straits in Europe and the rest of the World did not augur well for Tata Motors and Jaguar. The entire stock market registered a loss of 300 points on that fateful day sending investors scurrying around in panic.

Shankar Sharma, in times of distress, can be counted upon to come out in the open to reassure his beleaguered fans that the World is not coming to an end and there was no reason to panic.

Shankar Sharma did not disappoint this time as well. He calmed investors’ frayed nerves by dismissing the steep plunge in stock prices as an overreaction and advised investors to take full advantage of the prevailing negative sentiment to tank up on quality stocks.

As usual, Shankar Sharma’s advice was backed by solid logic. Shankar Sharma pointed out that the oil and gold prices had fallen and this meant that current account deficit would improve along with a favourable impact on the future of the rupee and subsidy burden. Shankar Sharma also said that the Global economic risks had already been discounted by the markets and there was no further downside on this score. He also pointed out that inflation appeared to be under control and interest rates were likely to be softened in the near future. Shankar Sharma expressed confidence that by the end of 2012, India would be the best market among the Emerging Markets.

Shankar Sharma strongly advised investors to start “nibbling” on stocks and invest upto 10-15% of their funds.

If one thinks about it, there is a lot of sense in what Shankar Sharma is saying. Since time immemorial, it is known that it is impossible to time the stock markets. It is also well know that one should buy stocks when the stock prices are down. So, what better time than now, when the stock prices are low, to start buying stocks slowly and steadily? Also, because one is only investing a small part of his available funds, if the market does correct further, he would be able to buy more stocks at a cheaper price.

Incidentally, the last time Shankar Sharma gave the advice to buy, investors who heeded his advice went home very happy at the state of their portfolios. So, this time, you can ignore his advice at your own risk.