Buying stocks during a dip, says Amar Nandu, research analyst, Samco Securities, can lead to higher compounding returns when the uptrend begins.
investors sometimes fail to understand the factors that determine it.
The Securities and Exchange Board of India (Sebi) on Thursday debarred Pacheli Industrial Finance and six others entities from the markets in its bid to crack down on a "pump and dump" case, substantiated by a probe into Rs 850 crore preferential allotment and examination of alerts around price movement of the firm's stock.
Clearly then, when buying a share, we should calculate whether its price is justified by what the company will earn in the future.
A fundamental analyst pegs a PE as "high", "low", or "fair-value", depending on EPS projections. Fair-value is a subjective calculation, based on earnings expectations and interest rates (the benchmark of risk-free returns). The theory is that PE will correct from the high or low end to fair-value.
'Over the next 12 months, it will be difficult to make 15 to 20 per cent return in the markets as the valuations appear stretched.'
Net inflows into two of the 'lower risk' equity funds - largecaps and flexicaps - outpaced the flows into smallcap funds during January 2024 for the first time in 17 months. This is an indication that investors may now be shifting to the relatively safer largecap stocks after a sharp run up in the mid and smallcap spaces. Net inflows into large and flexicap funds were at Rs 3,730 crore last month against Rs 3,260 crore by smallcap schemes.
PE ratio is one of the most widely used tools for stock selection. It is calculated by dividing the current market price of the stock by its earning per share (EPS). It shows the sum of money you are ready to pay for each rupee worth of the earnings of the company.
Alternative Investment Funds (AIFs) with a lock-in period performed better than the ones that allow investors to withdraw capital at any time. Close-ended schemes had a median return of 5.62 per cent in December, according to data from industry tracker PMSBazaar. The median returns for open-ended schemes were 3.91 per cent
India's largest asset manager SBI Funds Management on Tuesday said they are negative on equities from a shorter-term perspective as valuations have risen above the comfort zone. "We are not positive on equities. We think valuations are expensive. "The market has gone up a lot more than the earnings have grown," said R Srinivasan, Chief Investment Officer (CIO) - Equity at SBI Mutual Fund, at the launch of asset management companies' (AMC) yearly report on the market outlook.
Mutual funds (MFs) turned net sellers of equities in April amid a run up in stock prices on sustained inflows from foreign portfolio investors (FPI). The benchmark indices, Sensex and Nifty50, logged their biggest monthly advance since November last year, gaining 3.6 per cent and 4.1 per cent last month. Data from the Securities and Exchange Board of India (Sebi) shows that MFs sold equities worth over Rs 5,100 crore in April, the highest since February 2021.
Balanced advantage funds (BAFs) were popular in the later part of 2021 and continued to see good inflows until some months back as investors looked for safer options amid over-valuation concerns. As such concerns ease, investors are turning to riskier funds and shifting from BAFs. Redemptions from the hybrid fund category have exceeded in six of the last seven months, with investors pulling out a net of Rs 3,140 crore during the seven-month period.
Mutual fund houses have been on an equity buying spree in the past three months as they have invested a net amount of Rs 55,000 crore in them between January and March 2023. The number is more than double the amount deployed in the preceding three months (October to December), signalling improved valuations and favourable economic indicators. The valuations, which had peaked in October 2021, returned to its long-term average in March 2023.
The engineering and construction (E&C) sector delivered an excellent performance in the last two financial years (FY2021-22 or FY22 and FY23's nine-months) and there's reason to believe that FY24 will also see outperformance. The sector has emerged from the pandemic with stronger balance sheets and more rational cost structures. It has a big order book and it should see new order flows accelerate in FY24.
Transcript of the market chat held on February 7.
They will not be followed by analysts and no fund manager can buy such small companies with low trading liquidity.
Large companies, those that are talked about in the media and tracked on social media, have already been discovered. They won't lead to extraordinary gains, Debashish Basu points out.
Devangshu Datta believes you should pick stocks trading at much lower valuations than the market average.
Though the stock markets have gone up, many offer good potential for returns.
If investors decide that US equities are good value, the consequences for the Indian market will be dire.
Here is a series to help you analyse six personal financial ratios that will help you check your financial health.
India is emerging as a "parking lot" for global investors, but the capital flows in the market taking it to the 20,000-point mark "sometimes causes concerns" for the government, Commerce and Industry Minister Kamal Nath said on Tuesday.
Investors can sell their entire equity and move to debt when stocks get expensive
The Nifty Index features 50 of the largest companies in the country and represents close to 50 per cent of total market capitalisation. It is now trading at valuations that could only be justified if India Inc grows earnings at better than thrice the GDP growth rate. This is extremely unlikely, says Devangshu Datta.
Sebi is examining if speculators and persons acting in concert are behind the huge movements in these stocks
The current valuation is 38 per cent higher than the 10-year average of 22x and over 50 per cent higher than the 20-year average of around 20x.
After demonetisation, sharp fall in PE valuation offers an attractive entry point into some quality names and these 3 FMCG companies are expected to see the fastest growth in earnings with at least 15 per cent upside potential
Contrarian approach to investing works on the foundation of psychology of investors
Investors not stop their SIPs or STPs due to election-related uncertainty.
Bubbles can inflate indefinitely and also burst, with deep corrections, warns Devangshu Datta.
Valuations are much higher than the consensus earnings expectations warrant and also much too high in historical terms, says Devangshu Datta.
Raamdeo's base argument is that India's stock market merely mirrors the national economy, which is poised for big things.
There has been no reboot of the private investment cycle.
The yellow metal is a safe bet in the long run.
Food prices are also expected to move up due to the poor monsoons.
If you simply understand that you do not understand the sock market, that will be a favour. A big favour...
If rate cuts are fully transmitted, and RBI continues to cut rates in 2016, and earnings growth picks up as well, current valuations may be justified. Otherwise, equity will remain over-valued, says Devangshu Datta.
A good monsoon would translate into demand pickup across multiple sectors.
It is imperative to check the basics of a company before investing in it
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