The market have lost another 3.1 pc to end the week at 4928. The markets are at critical levels. So, what do investors do at such junctures?
1. The markets continued their downward movement on a variety of factors including Euro problems, policy paralysis by the government. The Government again postponed the FDI in insurance.
2. The Corporate Results continued to be a mix bag. One should focus on stocks which have low debt, are in sectors in which there is no Government policy confusion and give a steady dividend yield.
3. The markets broke through 4950 which was the 61.8 pc retracement level of the previous rise. The next critical level to watch is 4750. The markets may take support there and rise or if that is broken then we can test 4300, 3900 or even 3600.
4. The saving grace had been the falling crude oil prices though a weaker rupee has partially offset that. The Government shows no inclination of hiking fuel prices and the oil marketing companies continue to weaken.
5. For risk averse investors, the FD rates have started falling and this could be one of the last few chances to lock in at lower rates.
5. Another safer strategy is to focus on companies which give Dividend yields of around 5 %. Dividends are tax free in the hands of investors and yield about 7 pc if one were to consider the tax saved.
6. The markets are at a cross roads.
The reasons why the current fall is just a correction is that markets have corrected about 61.8 pc of the rise but taken more 1.5 times it has taken to rise. Usually, the falls take much time than the time it has taken to rise. Secondly there has been no major selling by the FIIs. They have stopped pumping in the dollars but have not made any major withdrawals.
Equities over the longer term always yield more than the FDs. For those who can afford to wait, the best option is to now continue thier SIPs and cash out when the markets hit their peaks. Also, bear markets typically last 12-15 months where as the bull markets go on much longer. The last 2 bear markets were from Jan'08 to Mar'09 (14 months) and Nov'10 to Dec'11 (13 months).
If we take this as a bear market from feb'12, then 3 months or almost 1/4th of the bear market is almost behind us.
So, the focus now should be high quality dividend yield stocks.
1. The markets continued their downward movement on a variety of factors including Euro problems, policy paralysis by the government. The Government again postponed the FDI in insurance.
2. The Corporate Results continued to be a mix bag. One should focus on stocks which have low debt, are in sectors in which there is no Government policy confusion and give a steady dividend yield.
3. The markets broke through 4950 which was the 61.8 pc retracement level of the previous rise. The next critical level to watch is 4750. The markets may take support there and rise or if that is broken then we can test 4300, 3900 or even 3600.
4. The saving grace had been the falling crude oil prices though a weaker rupee has partially offset that. The Government shows no inclination of hiking fuel prices and the oil marketing companies continue to weaken.
5. For risk averse investors, the FD rates have started falling and this could be one of the last few chances to lock in at lower rates.
5. Another safer strategy is to focus on companies which give Dividend yields of around 5 %. Dividends are tax free in the hands of investors and yield about 7 pc if one were to consider the tax saved.
6. The markets are at a cross roads.
The reasons why the current fall is just a correction is that markets have corrected about 61.8 pc of the rise but taken more 1.5 times it has taken to rise. Usually, the falls take much time than the time it has taken to rise. Secondly there has been no major selling by the FIIs. They have stopped pumping in the dollars but have not made any major withdrawals.
Equities over the longer term always yield more than the FDs. For those who can afford to wait, the best option is to now continue thier SIPs and cash out when the markets hit their peaks. Also, bear markets typically last 12-15 months where as the bull markets go on much longer. The last 2 bear markets were from Jan'08 to Mar'09 (14 months) and Nov'10 to Dec'11 (13 months).
If we take this as a bear market from feb'12, then 3 months or almost 1/4th of the bear market is almost behind us.
So, the focus now should be high quality dividend yield stocks.
No comments:
Post a Comment