Are you thinking of joining the party seeing my 25th Jan portfolio? It might not be very wise !
Sensex and Nifty distract all and I am also in that “all”. Last week was a sterling show of strength. Have you lost out in the gain? Not really. If you check we are still 18% down from July ’08.
Can it run up more ? sure it can as I believe the fair value of the sensex around 12-13 K. if it shoot up to 12K I would wait for it to correct till around 10K to buy and if it goes down from this level I would wait for 8.5-9K to buy. Can you start buying now , sure. On a day when the Sensex is down 300-400 points you can pick up some good companies. If you take a 1-2 yr horizon companies like Ashok Leyland at around 20 is very attractive but I would wait for it to dip before I buy.
Oct-Nov was a good period to buy. Companies like SAIL, RIL, TISCO and M&M have given returns of anywhere between 30% to 90% returns! It is almost impossible to time the bottom, but if you find great value it is time to buy. In the period of Oct-Nov the downside was around 10% but the upside seemed more than 40-50% so it was a buying period.
There are mails floating around speculating that Sensex’s new high might be at 37000! can it happen sure it can but first we must go beyond the 21K of 2008 and I don’t think that will happen in a hurry. It would also be a terrible thing to happen. Look at Japan, some years back it was at 40K and now it is bouncing along the bottom of around 8K. The 40K high might never be reached again.
MFs are again becoming active and trying to woo the retail investor. I just cannot understand this mentality. How can you just give someone your hard earned money and do what can be easily be done by you. It just takes 3-4 hours a week to do some basic research and buy good stocks. If you are hard pressed for time and cannot spend even these 3-4 hours per week then sure, go ahead, and give your money to MF managers. If you are planning to invest then I would suggest that you wait for the results to be out this month before deploying fresh cash. Price/Earnings, Price/Book and Price/Cash are some basic indicators to go by before picking up stocks. Current P/E ratio might give wrong inputs as the price is low and earnings are of previous quarter. P/B and P/C are still good. In the lows of Oct and March some companies like Indiabulls Realty were at prices lower than cash! Such valuations are worth dying for. There are still quite a few companies at such valuations. You just have to find them and read up on them to ensure that your investment is safe.
Note - My value picks are beating the Nifty by more than 9% !
Happy Investing.
