Start buying quality stocks selectively, in small quantities

Every investor wishes to buy low and sell high. But with most of the stocks having taken a terrible beating in the last six months, an increasing number of investors are wondering if this is a BUY moment. Investors are confused as the economic data which is being released across the world suggests that more market decline could be in front of them. Navigating through this uncertain and volatile market is quite difficult and for an investor to particularly time the market becomes even more difficult. No one can time the market perfectly. Actually, perfect timing is not a requirement for generating long-term returns from stocks. In fact, investors can benefit by changing their thinking perspective of usually asking if the market has bottomed out and whether it’s a good time to buy? Actually, it would be wiser if investors ask themselves—Can stocks currently priced deliver superior returns over the next few years? As most of us suffer from analysis paralysis pertaining to stock selection, the above question removes the burden of perfection. Analysts feel there is a strong probability that stocks may drift lower in the coming weeks or months and many stocks may reach their ultimate lows. This maybe irrespective of the indices, the NSE Nifty and BSE Sensex not bottoming out in the interim period. Investors should basically concentrate on the “Best of the stocks in their respective sector category” and buy when they cheap—which is right now. Investors should buy these “Best of the stocks” in small quantities over the next few months. Because as the rest of the market is languishing, these “Best of the stocks” do actually bottom out first and become suitable buys.
The Indian barometer indices closed the week in the positive territory with the BSE Sensex closing at 52727 levels while the NSE Nifty closed at 15699 levels. The sentiment was much better compared to earlier weeks on the back of cooling international commodity prices and positive global cues. For the month of June as of date, the Foreign Institutional Investors have sold Indian equities worth Rs 53,600 crore, while, on the other hand, the Domestic Institutional Investors have bought Indian equities worth Rs 41,983 crore. Analysts and fund managers expect the coming week to be mildly positive overall. But the stock market could remain volatile with bouts of selling on few days. Retail investors should start buying stocks selectively in small quantities after taking proper advice.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.