Synopsis
When buying a stock, ask yourself some questions. Why am I buying this particular stock? What will make me sell the stock – or when? Clarity on these questions will probably lead to better returns. These questions are important at a time when valuations are not your friend and you are thinking of increasing exposure to equities. Why are we discussing this? For a simple reason. There are times when, despite high valuations, the market keeps rising. Our assumption is that a large part of the negative news has been built into prices, and over the next few weeks the market will make an attempt to move upward once again. So, while being bullish, be selective.
Even after the recent phase of correction, it is not possible to find stocks that may be called “fairly valued” – forget “undervalued”. Yet, a few days of upmove in the Nifty and the sentiment will turn bullish again. We will all forget what happened in October and November. So, for investors it would be wise to take exposure to stocks where as a sector the overall market size is big – or it has reached an inflection point where the market size
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