On Sept 13, we saw the markets zooming ahead. And I got a mail highlighting the limited number of scrips that outperformed the index on this very day.
What are the implications?
Are we seeing the typical blow-out phase of any bull market?
The real answer - I don't know. The bitter truth - No other persons knows, either.
Hence, what should we be doing at this stage?
My own recommendation from Nifty levels of around 5500 would be as under:
- For every 5-7% increase in Nifty, keep lightening up your stock portfolio by around 12-15%, in all the stocks which have run up significantly in the past 3 months, thus increasing your cash levels
- If you have the capacity to be patient, and if you don't mind seeing all your friends, colleagues, etc. making more profits than you in the very short term, sit tight on cash
- If you are the type of individual who must compulsorily remain invested in shares and don't believe in holding cash, at least try to buy in a staggered manner
- Also, in these highly risky global environs, if you insist on buying shares at current levels of Nifty,
- Try not to buy shares which have run up very significantly in the past 3-4 months (After all, I'm recommending that you keep selling such stocks!)
- Instead, try to buy those fundamentally sound stocks which have not run up already - like Reliance Industries, NTPC, Real Estate stocks, Specific Agri-product stocks, Specific cement stocks, etc. Ideally, stick to large-cap stocks at this moment - AND BE PREPARED TO HOLD FOR A LONG PERIOD!
- Make sure that unless you are a past master, don't play with futures & options at this stage
- As always, keep your stock exposure in line with your risk profile and asset allocation norms.
Mon Sep 13, 2010 10:42 pm (PDT)
Yesterday when nifty broke out sharply by about 2.13 % ;
- there were only 26 stocks among nifty category which outperformed the
index and 76 that under performed.
- and among a-z category, there were just 216 stocks that out performed and
as many as 1101 stocks which under performed.