Track movements, review portfolio for better yield

The third quarter results season started with a good set of numbers delivered by the technology major Infosys.
Markets are trading close to their 52-week high. The Sensex is trading at around 17,500 and the Nifty at around 5,200.

The undertone in the market is bullish and analysts believe the current momentum will take it to newer highs, if the results do not have any unpleasant surprises. The consumer sentiments have been quite strong in the market as reflected in the sales numbers of December.

Investors should track the sentiments in the global markets. Foreign funds coming in were one of the main reasons for the sharp rally in the markets during the last year, from their March lows.

Most of the large global economies have not fully recovered from the recession. The pace of the economic recovery is quite slow in these markets and there are several challenges yet to be overcome in some countries.

Negative sentiments in those markets might trigger a correction in the markets here as the current rally has been in one direction only.

In general, investors should remain cautious in the markets as they have gone up quite significantly over the last 8-10 months.

Investors should review the performance of their portfolios and initiate actions according to changes in the larger economic and business conditions. Identify favourably placed sectors in the current economic conditions, and invest in selected fundamentally-good stocks.

These are some strategies for investors in the current market conditions:


For long-term investors: Investors holding positions in the markets with a long-term horizon - a couple of years or more - should look for longer-term market trends. Since the investment sentiments are bullish worldwide, it is better to maintain the current positions.

However, a review of the portfolio should be done based on the current macroeconomic (global conditions, credit situation, market demand) conditions, business conditions and the quarterly results. Changes in the portfolio can be made based on this performance review. Those looking to investing fresh money in the markets should wait for a correction phase to take positions.

For medium-term investors: Since the markets are trading at a 52-week high, investors holding positions in the markets with a short or medium-term perspective should look for opportunities to book profits. However, the dilemma is to remain invested in the markets or not as the sentiment is still quite bullish. In such a situation,
it is better to book partial profits and hold the remaining positions with a defined cut-loss level.

Investors should remain cautious and not hold their investments for too long. Also, it is important to track market movements regularly, apart from the developments related to the stocks of their interest.

Investing now:

Those looking at investing in the markets now should not take decisions in a hurry. It is better to wait for a correction phase.

However, the problem is that if the markets do not correct significantly, there is a chance of missing the opportunity. Analysts therefore suggest choosing stocks and investing in small quantities at regular intervals.
This way one can ensure a lower average entry price with a calculated risk.

In fact, it is the entry and exit prices of a stock that decide the actual profits for an investor. Since it is difficult to predict the top or bottom in the market, one should trade in smaller lots to get a good entry and exit price on an average