When economies slow down, the stock markets struggle to find a stable leadership pack. How this leadership pack is built effectively determines the course of every bull market. The early phase of forming a new market leadership is the toughest. The confidence in a specific sector to effectively provide market leadership is evolving. The technology companies have clearly given the markets the much needed lead anchorage. This should help the markets to look for positive news flows in other sectors. The leadership pack will widen as companies start to give positive news flows. For now, it is clear that a new pack of market leaders has begun to evolve. That is reason enough for the gloom to end.
“I never put a stop loss on my holdings because if I like a stock in the first place, I like it more if it goes down.” – Walter schloss
FII flows tend to impact the Indian markets more than anything else. Investors tend to track this metric over valuations to decide if they want to invest in domestic equity. This is primarily due to the lack of market breadth among domestic players and the tendency of FII’s to invest in large concentrated sums over shorter periods of time. Effectively, the FII’s call the shots in the Indian market and others follow. Being a follower in the market comes with its attendant risks. If you are a late entrant, you are unlikely to profit from equity investing. The only way to beat this jinx is to invest steadily when the FII’s are unwilling to invest and to stay invested when their act plays out.
Sell into the rally. Re-organize your books.