We continue to remain invested in high quality small and mid cap companies with strong fundamentals and recently increased allocation in these companies considering significant fall in stock prices since Jan 2018. We believe severe correction in broader markets with significant fall in stock prices of small and mid caps in last 15 months is giving a wonderful opportunity to long term investors to build a diversified portfolio by investing in good companies backed by strong fundamentals at much lower prices. We expect cyclical stocks with strong fundamentals will outperform going forward considering reasonable valuations, stable crude oil prices and higher spending of middle class with rising disposable income.
Below are some of the major reasons of severe fall in stocks prices of small & mid cap stocks since beginning of 2018 till Feb 2019:
ii) Introduction of Additional Surveillance Measures by SEBI to curb volatility
iii) Auditors exit from various companies on fear of stringent action from authorities
iv) Unfavourable macros with increasing crude oil prices and depreciating rupee
v) Trade war fears between US and China, rising interest rates, continuous selling by FIIs
vi) Panic in market due to liquidity concerns, IL&FS default on debt repayments
vii) Political uncertainty with setback of BJP in assembly elections in 3 key states
viii) Concerns in market due to severe sell off in large caps stocks like Zee, Tata Motors
ix) Panic arising due to stock prices of ADAG companies falling line nine pins
x) Nervousness on Dalal street with rise in geopolitical tensions post Pulwama attack
With fall in stock prices in broader market during last 15 months, small and mid caps valuations turned attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell but to accumulate good companies available at discounted valuations. Moreover, we can see renewed buying interest in small & mid caps in coming months considering strong flows from FIIs during this month. As mentioned earlier, bad sentiments do not last for ever, its time for long term investors (2-3 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.
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, you can initiate your investments now. Below is the Wealth-Builder portfolio allocation and performance update 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.
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 as a continuous process to ensure that Wealth-Builder portfolio continue to outperforms major indices by wide margin.
Note: Wealth-Builder portfolio update - March 2019 will be released on 31st March'19 (before end of the day) and we will share the same with our Wealth-Builder members.
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2. Portfolio of 10 Small & Mid Cap Stocks for FY 2019-20 - Read More
4. Special Report - 6 Hidden Gems Stocks to Buy / Accumulate (30th Sep'18) - Read More
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CARD / NET BANKING
|Hidden Gems||Rs. |
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