Last 2 Year Performance of Sensex, Mid & Small Cap Index

High Inflation, high interest rates, rising crude oil prices, weak IIP numbers, GDP growth slipping below 6%, slowdown in trade and exports, europe crisis - All these factors are hurting sentiments of investors and keeping them away from investing in equities. Can you imagine, retail participation in India in terms of investments in stock market is at 4 years low.

There are hundred of stocks which not only tested 52 week low but now are available at 3-5 years low. After such a severe correction in prices of small and mid cap stocks, is there more pain left for investors?

Lets look at Past Performance of Small and Mid Cap Index - Last 2 Years

Small Cap Index on 6th Sept 2010 was at 10095 which made a high of 11367 on 11th Nov 2010 and today closed at 6391. Hence, Small Cap Index has given negative returns of -37% in last 2 years. If we look at Mid Cap Index, it was at 7962 two years back and today closed at 6024, returns of -24% in last 2 years. Similarly, Sensex also gave negative returns of -14% in last 2 years.

What a disappointing performance of both indices including Sensex? A strong reason why your mutual funds are not performing. Isn't it? But are your fund managers smart enough to outperform major indices. We don't think so, more than 80% of equity mutual fund schemes have underperformed major indices which means that your mutual fund is giving you lesser returns compared to these indices.

Is this really bad? Are you worried? You should not!

Its a fact that nobody in this universe can time the stock market but its wise for medium & long term investors to invest during tough times. Using this approach, Investors can bet on stocks which are fundamentally strong and are trading below their intrinsic value, you can get them cheap due to poor economic conditions and negative sentiments in market. And once sentiments turn to positive, it rewards investors who entered during market lows giving great returns to them on their investments. A right approach towards equities - buy at low, sell at high. But more important is to invest in right stocks.

Hence, you must consider this as an opportunity to invest in fundamentally good stocks for medium to long term.

So in which stocks you can invest in?

You can invest in small, mid as well as large cap stocks of sectors which are heavily discounted. Small and Mid cap stocks are more volatile compared to large cap because of low liquidity. Hence, during bad times, they experience more pain in terms of falling prices. But good small and mid cap companies with sound fundamentals can give you multibagger returns in medium to long term.

Now lets review performance of Saral Gyan - Hidden Gems

It gives us immense pleasure to share that Saral Gyan - Hidden Gems (unexplored multibagger micro/small cap stocks) outperformed all major indices during last two year giving excellent returns to Hidden Gems subscribers during bad times of stock market.

6 out of 21 Saral Gyan Hidden Gems stocks (Sept 2010 - May 2012) gave more than 100% returns to our investors. Average returns of Hidden Gems (as on date) is +26.5% (maximum average returns is 64%) compared to negative average returns of -15.3% of small cap index. Moreover, we suggested partial profit booking in those stocks which have given more than 100% returns in short span of time. Hence actual returns are more compared to average return as indicated in below table.

Below is the performance of Hidden Gems of last 2 years (upto Jun'12) recommended by our equity analyst team: