Milestones like 12000 are a nice point to just stand back and access the overall situation. So, what is the reality of the day? Today, the price of oil is hovering around $70 with the political situation in
My feeling is two factors need to be watched most cautiously today. First is the oil price. And second is the liquidity coming into the markets. Oil price hike is inevitable after the state elections are done with. My estimate is that there will be quick and big hikes in the price of retail fuel in
There are two things that can save this market from a macro view. First is if the global oil price stabilizes at on or below $60 per barrel. And the second is if the foreigners or even Indians perception of relative risk-reward moves a shade towards riskier assets. In simple terms, it means that if people continue to pump in more money into the system, the system will not break down. It is possible that following the herd mentality, the Indian markets continue see a deluge of foreign investment. There are cycles in these things also, and it is looking to be a great time for
In this backdrop of events, the ever pertinent question of what should be done now with our holdings crops up. Should we buy, hold or sell? If buy, then buy what? If sell, then sell when?
The Indian market – probably unlike some other developed markets – has always been a market driven by momentum. My prescription is to keep holding as long as the going is good. But don’t get married to your stocks. Have some part of your portfolio in trading positions (short term – typically for around a month). Keep rotating these positions to suit the flavour of the time (e.g. now its cement, sugar and metals) and book profits regularly. For your core long term holdings, keep a liberal mental stop loss – say 10% or 15% below the current price (I am assuming that you are making more than 15% profits on your core long term holdings). Stick to the stop loss and sell if and when the price gets there.
Just as an example, my personal portfolio comprises now of 40% trading stocks, 40% core holdings and 5% fixed deposits and 15% cash. You will have to select your own holding proportions.
“One who fights and runs away lives to fight another day”