The month of  October ended on a positive note for the markets. Trends seem to be indicating that the economy is doing reasonably well. Firstly, the GST collections crossed 1 lakh crore once again. Oil prices softened from the menacing levels it hit earlier in the month. Sales of the first 600 companies to report quarterly numbers grew very healthily at 20%. Auto sales continued to do decently, though they did lose some momentum in some segments. There are clear signs of a nascent capital goods revival. The rupee shows signs of moving higher from its recent all-time lows. The interest rates also seem to have formed a near-term top and corrected.

Yet, there is some sense of caution among informed players in the market.  The reason is the soaring costs that are forcing profits down. This fear is evident in the rising earnings downgrades coming out of analyst desks. The coming months will see focus intensify on politics and this will only add to the confusion. Investors seem to be ill-prepared for the demands of the emerging scenario.

We need to handle the political fallout. We also need to prepare for a broad economic revival in the coming years. We need to remove the imbalances in our portfolio approaches. These call for a radical rethink in our investing. This hardly seems to be evidenced anywhere.

With every correction, investors are repetitively buying the same stocks they bought earlier in the year. This may not end well. The coming quarters will see a sharp reset in market preferences and market leadership. Investors need to prepare themselves for this and ensure their portfolios anticipate the changes ahead of the market. That will hardly be easy as peers may not be in any hurry to do what you think is urgent.

Lonely times lie ahead.

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