It’s not only difficult to predict what will drive markets but also the direction which they will take

New Delhi | Published: July 27, 2018 1:19:15 AM

While the Sensex is scaling new heights, all investors are not happy. More than 300 stocks on the BSE hit a fresh 52-week low on July 24 when the market was at a record high.

moey, economyIf you seem stuck with stocks that are hitting fresh 52-week lows on a daily basis, then your portfolio might need a relook.

While the Sensex is scaling new heights, all investors are not happy. More than 300 stocks on the BSE hit a fresh 52-week low on July 24 when the market was at a record high. So, what is missing and what are the factors driving India’s stock market upwards.

There are many factors responsible for the record high for Indian markets. First, sharp fall in crude oil prices was a huge boost for the markets. At the time of writing this article, Brent Crude oil price was hitting $73.19 per barrel against $76.74 seen in the first week of June 2018. Fall in oil prices is good news as it reduces pressure on import bills and eventually pulls inflation down. Oil and gold are major items in India’s import bill. Recovery in the rupee against the US dollar is an added advantage. A strong rupee reduces pressure on import bills. Above all, the market is expecting good earnings (Q1 results) from listed companies. All these factors are enhancing optimism for markets which push markets to a new high.

Relook at your portfolio

If you seem stuck with stocks that are hitting fresh 52-week lows on a daily basis, then your portfolio might need a relook. That is one of the pitfalls of investing in the market directly, without adequate research. Before investing in stocks, companies need to be thoroughly investigated and read up on.

Not only do the numbers need to be understood and crunched but also the softer aspects of the company need to be looked at. Who are the promoters? What is their vision for the company? How do they treat minority shareholders? All of these aspects need to be gauged and only then should you take a decision.

As most of us do not have the time to do so, it is better to look for equity mutual funds. Investment in mutual funds is one of the best professional modes of investments. The professional fund manager tracks markets every day along with small-cap, mid-cap and large-caps stocks. The opportunity to miss that gem of a stock is less here. A professional fund manager has various tools to find real stars (stocks) for you which have a potential to grow over the long-term.

Don’t look only at index movement. It is not only difficult to predict what will drive markets but also the direction which they will take. However, with high professional skills, fund managers are in a much better position than average retail investors.

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