Frothy valuations, Earnings Upgrades to take a pause. What should investors do?
It is on record now this is the third-longest trending up move in the history of our stock markets without a 10% correction. Over the past 3 months, the moves that are taking place in many stocks have been euphoric, to say the least. Many stocks were having parabolic moves and such moves were last seen in Dec 2007.
Here are some key highlights
Margins could be under Pressure for India Inc
Valuations frothy in many parts of the market
Earnings Upgrade to take a pause due to higher input cost pressures
Near term, much of the good news in the price broadly speaking
Bonds suggesting Rate Hike cycle could be as early as Jan 2021
So with all these concerns which are coming up what should investors do?
First and foremost is book profits in stocks that are having excessive valuations. Over a period of time, we have seen this time and again that extremely high valuations do not sustain over time and we have always seen price and time corrections for excessive valuations to get adjusted.
Secondly, move to stocks where valuations are decent and growth visibility is still decent. One sector has been shortlisted by us and we have been telling our clients to switch to that sector. We see this sector outperforming the broad markets by a very big margin over the next 9-12 months. So this sector is still going cheap, valuations are still decent and in some cases, good and growth outlook is much better than the broad markets in the months to come.
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As usual, if you are only trading on the basis of this post please use your own risk management and then only trade. Please do not over-trade and always keep your risk in check.
Regards, Glen Drago 95 6316 6316