The stock market has been on a roller coaster ride in 2013. The Nifty was at the 6000 level in early January and sank to 5500 in mid-April. Then the tide turned and the Nifty has surged back to the 6,100 level in mid-May 2013. The question is what has fuelled the steep rise of nearly 11% in the Index in a short period of 4 weeks? One answer may be that it was over-sold in April 2013 and that it is just correcting to its normal position. The other answer is that there has been a sudden surge of liquidity globally and that a part of it has found its way into the Indian market. At a fundamental level, nothing much has changed. The interest rates haven’t been dramatically reduced nor have corporate earnings dramatically increased. Even the political uncertainty continues.
It seems quite clear that every sharp upswing in the Index will meet with a sharp downswing and vice versa. Then, over a period of time, the Index settles down and finds its’ equilibrium.
Now, the question is what you should do in the situation. Even if you are a buy-n-hold investor, it makes sense to take advantage of the swings in some form or the other.
Personally, I think this is a good opportunity to shuffle the portfolio. I have a number of stocks in my portfolio that are dead-weights and which I have been wanting to get rid of. This is a good occasion to let them go and to deploy the funds in stocks in which I have greater conviction when the impending correction comes. I am going to tank up on Amara Raja Batteries, Bajaj Finance, Bajaj Finserv, IPCA Labs and also Supreme Industries.
The only problem is one doesn’t know at what stage the correction will set in. It is possible the Index will surge another few percentage points before deciding to take a breather. Also, how much of a breather it will take is another unknown variable. Still, if you have a game plan in place, you must implement it decisively and have no regrets later.
What is your strategy?
Simply sell all the holdings rather chasing any stock now. Because we are in trading grip of +/- 500-600 points of NIfty. If now 10 good stocks available to invest,in stiff correction you will get 50 stocks in bargain price..
Hi ,
At this point of exuberance (1/12/2017) – roughly 3.5 years past the current post (sensex at 32832 & nifty at 10100 (100% gain of index)) – . I am going through all your posts dating back to jan 2009 . Thought of commenting on this post , to know whether you had bought & holding , bajaj finance & other stocks which you have a fore mentioned ?