We continue to remain invested in high quality small and mid cap companies with strong fundamentals and increase allocation in these companies in case of fall in stock prices during market correction.We believe any significant correction in market from current levels must be considered as a buying opportunity. We expect cyclical stocks with strong fundamentals will continue to outperform going forward considering ease in interest rates, stable crude oil prices and higher spending.
If we look at last year, we find stock market extremely volatile, major indices - Sensex and Nifty corrected in Jan and Feb 2016 followed by sharp recovery of more than 25% during next 6 months from lows of Feb'16. Later again seen significant downside due to global as well as local factors like Trump winning US elections, demonetisation impact and increase in crude oil prices.
Sharp fall in stock prices last year in the month of January and February and later in November created panic situation for many new investors without any cues and put them on back foot when it comes to investing in equities. In the month of Feb'16, many investors were expecting further fall in stock market with indices testing new lows and hence remained on sidelines. However post union budget 2016, we witnessed strong rally across all broader indices as FII turned to be net buyers. This year also, we may experience similar upside in major indices. However, as stock market already rallied in last one month, it will be wise to start accumulating good stocks on dips which are available at reasonable valuations.
As normal correction, we may see downside of 3% to 5% in major indices. However as mentioned in many of our previous posts, we do not believe in timing the market and always suggest our members to avoid it and invest in equities in a systematic way keeping a long term horizon.
Any sharp corrections give great entry point to long term investors as they get an opportunity to add high quality companies with strong fundamentals at discounted price.
High quality companies reporting 20-30% + annualized growth can deliver exceptional returns for the shareholders in long term. In case you have not yet started building a portfolio of high quality and high growth stocks for long term wealth creation, please find below the Wealth-Builder portfolio allocation for your reference.
We believe, investing in Wealth-Builder portfolio with regular portfolio review from our end can help you achieve market beating and very good returns over a longer term and help you take care of yourself and your family needs, which ultimately lead to a healthy and wealthy life after retirement.
Since inception, our Wealth-Builder portfolio has outperformed Nifty and Sensex by wide margin. Since 1st Jan 2013, Nifty has given returns of 47.8%, Sensex returns is 44.7% where as our Wealth-Builder portfolio has given returns of 281.7% to our members.
In terms of performance, 8 top performer stocks out of 16 of Wealth-Builder portfolio have given returns in the range of 50% to 750% since 1st Jan'13 that too when many of these stocks out of 16 were added in portfolio during last couple of years. Moreover, 8 stocks out of 16 have made 52 week high / all time high recently. We continue to hold these stocks as we believe these companies are registering good growth every quarter and doing all the right things to continue delivering robust top line and bottom line with strong operating margins.
There were few laggards also which have not performed up to our expectations and we exited these stocks and allocated the available funds to other good investment opportunities to ensure that Wealth-Builder portfolio continue to outperforms major indices by wide margin.
Note: Wealth-Builder portfolio update - Feb'17 will be released on 12th Feb'17 and we will share the same with our Wealth-Builder members.
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Team - Saral Gyan