Long term investors should not time the market, these five factors should be taken into consideration if one is willing to invest for a long term horizon, Ritesh Ashar, Chief Strategy Officer – KIFS Trade Capital, said in an interview with Moneycontrol’s Kshitij Anand.
Q) Nifty saw its longest losing streak for the first time since 2015. Do you think the pain is here to stay or have we made a bottom on the index?
A) The main reason for the recent weakness on the key benchmark index was due to the geopolitical tensions and the uncertainty may continue for a couple of months. The overhang of the election will lead to more volatility and there are no major signals of market making a bottom at this level.
Before going for bargain hunting, investors should look for these 5 ‘value parameters’
Q) Most experts are suggesting that the majority of the stocks might have just bottomed out. How should investors filter these stocks for investment which may have fallen in double digits?
A) Long term investors should not time the market, these five factors should be taken into consideration if one is willing to invest for a long term horizon.
Most of the weightage should not be given to quantitative analysis but equal weightage should be given to qualitative analysis as well.
– Company should have a competitive advantage
– Visionary top management
– Ethical environment (following corporate governance)
– Product line
– Market share
Q) How is market looking on technical charts? We have an expiry and a couple of important data points to take care in the coming week. Do you think we are in for a volatile March as well?
A) If we look at the lower time frame charts mainly weekly, Nifty consolidated in a tight range of 10,585 on a lower side and 11,100 on the higher side. Now that the bottom of 10,585 is tested, we are expecting a pullback towards 11,000 and for a medium-term aspect breakout on either side will determine the actual trend.
Q) What is your call on small and midcaps which have shown signs of bottoming out in the week gone by?
A) Midcap and small caps have a tendency to outperform the key benchmark index but multi baggars have their own personalities.
We have seen that from the past one year midcaps have corrected by about 40-45 percent from the recent top and this can be grabbed as a great opportunity to enter into midcap stocks. Rather going for a directional view, one should go for stock specific action.
Q) Metals stocks seems to have grabbed investors’ attention. What are the reasons behind the rally and any particular stocks which are looking attractive and why?
A) After witnessing continuous fall since the last two months, the metal index gave a robust performance owing to the positive global cues. This should not be declared as the reversal but it can be considered as a major pullback.
Stocks like Hindalco and JSW Steel look decent at this level.
Both Hindalco and JSW Steel reported a healthy quarter three result where the sales figure came in positive where the volume grew as well as the revenue from the domestic business was quite impressive.