The stock market is showing all-around strength with strong retail sentiment supporting multiple themes and categories. FIIs have also reversed their selling stance and turned into buyers recently. The setting is perfect for more block deals, bulk transactions, QIPs and IPOs. Raising money has become easier and even companies who don’t need capital are using the liquidity to raise capital. The strong twin effect of liquidity and sentiment could support this trend for a while.
We could well see the biggest IPOs in our history go through smoothly. Finding the right opportunity will still be a challenge for active managers. Only the more liquid large-cap stocks will help absorb more capital. Managers must be selective in deploying investments into other themes and categories.
Investing will need to be calibrated and disciplined. Investing should not be done in a hurry and research must be very precise while making judgements. The room for error is very limited, and investing in an era of high valuations will be extremely challenging.
But that’s what makes investing in such times a passionate pursuit for many and a lifelong obsession for the devout. Tough times help bring out the best in an investor, even while stretching his temperament to the extreme.