Last Updated on Feb 18, 2022 by Manonmayi
This article is authored by Soumitra Sengupta, the Director of Lamaron Analysts and Manager of smartvalues smallcases. He has over 20 yrs experience in investing in India and US.
On Monday, stock market bulls were seen nursing their wounds as bears carried out a bloodbath on Dalal Street, causing benchmark indices to suffer their worst loss in the past 10 mth. The increasing Ukraine crisis further triggered the selling, as Western nations warned of a Russian invasion. As a result, all market sectors finished in red. The 30-share pack Sensex fell 3%, and the NSE Nifty lost 3.06%. TCS was the sole gainer, up 0.93%. JSW Steel was the Nifty pack’s biggest loss, plunging 6.47%.
This bleak picture of the market could have made you anxious. Several pressing questions may have invaded your peace – should you buy the dip, should you hold and do nothing, or should you sell stock to stop your loss? Let’s find out.
Mark Twain has been wrongly reported that the only two certainties in life are death and taxes. For stock market investors and participants, add another certainty – periodic corrections. No bull market lasts forever. We are in a correction, and the only thing that one can say with certainty is that this will be the first of many in a reasonably long investment career. After all, I have this on the authority of Warren Buffet, who likes to say that the stock market is manic depressive.
The bipolar nature of the market, if one may call it that, was on display earlier this week when the market first plummeted and then the next day, it rocketed. So what do you do in such circumstances? You go back and review your holdings.
In the case of smartvalues, our stocks are all constituents of the Nifty 50 index and belong to India’s top tier companies. There is no fear that these companies will not be around when the markets recover. So there is no need to do anything drastic and overreact to a particular market move.
At smartvalues, we do long term trends in large-cap liquid stocks. Periodic corrections do not change the long term trends meaningfully. Some of the stocks that we have held since the inception of the baskets, such as Bajaj Finance and Infosys, have appreciated meaningfully, and we shall continue to hold them. We may make some adjustments to the portfolio, but that would be based on our long term objectives and not as reactions to specific market moves.
The smartvalues investment objective has been to generate returns over and above the Nifty 50 index, and we have maintained that objective this year. We look forward to continuing to do so going forward.
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