Is entering equity market safer ????

"Is entering equity market safer in this volatile market?" This is a tough question that is dogging in every small and retail investor in Indian market. Many feel under the current circumstances markets are not a good idea any more.

One decade ego, investors used to invest and forget about the scrip for many years, but now the term " long term" definition has changed from 5 yrs and above to 12-15 months in average. There is so much uncertainty and volatility that it is difficult to predict the direction of market. 

When there is so much confusion, one should calm down and keep in mind one's own objective in mind. If the objective is to trade well, one must be willing to take risk vs uncertainty and must be willing to take the consequences. But, if one is an investor, which ideally one should be, then picking up fundamentally strong stocks is the perfect thing to do.

Fundamentals never go out of fashion. New theories to assess market could come up. But, the way we analyze one scrip would remain the same. Fundamentals means, asset quality, healthy earning, management, past track record, debt undertaken, cash balance and above all reputation.And once fundamentals are in place, five year time span would be the best long term time measure. 

Staying out of financial market in a view of uncertainty is not going to edge against inflation. The chances of loosing money would remain 20% and gaining 80%. So, one should stop worrying about 20% loss when one has potential to gain 80%. The average would still be better than not loosing or gaining anything. Yes, one should diversify one's total asset. For a young investor with ample time to invest and higher risk taking ability, one should not fear to enter equity market.    

Cool Cool Summer stocks

The Summer heat is here and we are already in mid of intense summer heat. The month of May is the most intense summer and heat waves blows across India. Silk clothes are tucked deep into the wardrobe and the light pastel and white cottons are in. Deep fried foods are out and light meals with salads, ice-cream and soft drinks are in. Sunscreen, Sun glasses and umbrella are most to protect from blistering heat.

Just as we change our general lifestyle, food and clothes to adapt to the changing climate, it is good to have a re-look at our stocks. Like summer clothes there should be stocks to beat the summer heat. Like monsoon is the season to look at agricultural stocks and pesticides and winter is the season to have everything keeping in mind the festive season. There most be something that is summer season specific. Lets now explore this criterion.

This buying is based on logic. Now, just look out and think, what would you reach out to in this summer. those which you buy and consume for summer is definitely the stock for summer.

Naturally, the biggest winner in summer would be home appliance companies - specifically AC, cooler and fans. Companies like Voltas, Bajaj electricals, Videocon, Symphony, Godrej would surge. Though, now the China made cheaper varieties are giving hard competition to these companies.

Now, again the sale of these home appliances depend on the power cut. In general most part of India would have to face regular power cut and without power there is no use of any of these. Hence, alternative power source like gensets and inverters would also see a surge in volume. Companies like Kirloskar power engine, Greeve cottons, Cummins, Mahindra Poweroll and Eicher would rule this place. However, China products also give stiff competition to these. Refrigetors would also have uptake in this summer.

Next lets look at the fast moving consumer goods (FMCG) sector. To beat the heat the consumption of soaps, deodorants, perfume, shampoos, talcum powder and skin care products would increase.Already, FMCG has seen a good growth due to price rise of vegetables and edibles. The rulers like HUL , ITC would see a good uptake in this summer. This is a peak season for ice-cream makers, and Vadilal industries and HUL rule's this place. Non of the aerated drinks companies are listed in stock exchange, so next lets look at the fruit juices. Only Dabur has Real fruit juice and this would also see a good uptake.

To meet the heat, people would like to spend more time in malls and movies. So, this could be good season for Future group, PVR and INOX. People would also like to take up holidays as this is school holiday season. So, the companies like Cox & Kings, Thomas cook would do good business. Travel companies and mid range hotel companies would also do brisk business. 

Akshya Tritiya & Gold Rush

Media has hyped all the small and insignificant festival like Akshya Tritiya, that we never celebrated in our childhood. Today, like Mother's day and Father's day, Akshya Tritiya has gained a lot of public attention. Even the daily soaps in TV are advertising Akshya Tritiya as though this in an Indian National holiday where newly purchased gold is required to be used in Hindu ritual ceremony.

No doubt, Akshya Tritiya has got religious significance. This is the day, when according to Hindu mythology every moment is considered auspicious and hence, any venture that is started on this day will be fruitful. This day does not require any Muhurat calculation before starting anything new. This day the Sun and moon are at their brightest and this happens only once in a year. This is the birthday of Lord Parshurama one of the Avtar's of  Lord Vishnu. And also this is the day when Lord Sri Krishna's childhood friend Sudama visited Mathura, and without him uttering anything for his poverty, Lord Sri Krishna understood his problem and blessed him and his family wealth and prosperity. That is the day depicts- Akshya means eternal blessings, one which will never perish.

In our childhood days, this day was considered the best to conduct marriage, thread ceremony etc. However, in this new age of Media and consumerism, the goldsmith and jewelers have hit an excellent marketing trick and have hyped this as the day, when gold purchase is a most. Just like various other days which are gimmick of greeting card companies, Akshya Tritiya has become marketing gimmick of gold shops across India.

This is an auspicious day, and is important to make a new beginning, that is why you should not purchase gold this day. In this age when lot of financial assets are readily available like stocks, MF's, bonds, FD's and PPF's etc why you need to stick to gold.

We Indian's are quite sentimental towards this yellow metal and consider this as the best asset. The price of yellow metal does not allow to wear these ornaments as this adds to unnecessary attraction in public. So, you end up purchasing the ornaments and keeping it in safe either in bank locker or in home locker.

Yes, it is true that in last decade gold has had a good price run up. But, is it really worth. We think investing in Gold our asset value is growing, but compared to other asset classes, gold has not had any good returns. This certainly beats the inflation in US but not in India where inflation is so steep.

Instead, we should consider other asset classes and divert our hard earned money that could give a much better result in long term. If the money invested in fundamentally sound stocks, surely the return would be much better.

Do not fall for the gimmick and if you must purchase then identify some fundamentally strong stocks that could give you much better margin over yellow metal. Stocks also give you regular dividend yield and bonus. However, the yellow metal neither grows nor gives any interim return. It is true if you sell gold you can get good value, but too much gold attracts wealth tax . In general we all have soft corner for our family gold and would never think of selling them until we reach a state where nothing else works. Before, investing in gold, think if you could definitely sell them if you are considering this as asset.