On the cusp of change

Quick Edit:

Nervousness is not new to the stock markets. The context which creates it makes all the difference. The week saw nervousness of a different kind. The markets refused to go down.  An eagerness to see positive news flows contributed to the nervousness. After a long time, fear seems to be receding. The week closed with the expectation that interest rates would be brought down and liquidity raised by RBI on Monday. That sets the stage for a change in the market mood if the expectations are met or surpassed. The weekend will see more global action as Greece decides on its political future and economic direction. The world seems to be taking even the exit of Greece in its stride. That brings us to a point where the markets have started getting tired of being fearful. Typically, investors start to return when they see that things aren’t as bad as they thought. The return of investors will be gradual and the markets will test higher levels as more people jump in. But, for a positive chain of events to be triggered, the RBI needs to send the right signals on Monday. A sizeable rate cut is what the market wants. Will the RBI oblige?

Invest Speak:

Multi-baggers are not rare. The markets throw up multi-baggers all the time. Even bear markets throw up a few. But, bull markets are when we see multi-baggers all around. Investing in multi-baggers is not accidental or serendipitous as many investors believe. Stocks with the ability to deliver phenomenal returns have distinct characteristics. They grow steadily. Their profitability is high and stable. Their businesses enjoy unique competitive positions. In short, they stand out from the crowd. The attributes mentioned above remain with the company through good and bad markets. Therefore the price at which you buy the company is what decides if it will be a multi-bagger for you. Bear markets are when you must buy your multi-baggers. You need to ensure that you buy enough of the stock and buy them at a decent pace so that the price doesn’t run away. Buying too much too soon is another folly you mustn’t commit. Striking the right balance and keeping a cool head will get you there.

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