My April 19 article written for Financial Express
Although Nifty is at its peak, the average drop of 3,000 shares traded remains at 40-50% from the highs of 2018. The smaller the market capitalization, the greater the decline in its shares. While nothing out of the ordinary: small businesses move wildly in both directions according to market sentiment; after all, they are traded in a reduced way with a free float (non-promotional participation, available for trade), so that the increase in volumes can cause a high impact.
Viewers and investors who have recently entered the markets may have concluded now that it is so safe to invest in large capitalizations that not only did not fall much in the correction, but now, when the markets are improving, they are also participating in the rise. While only on the basis of this observed divergence between large select chapters and broader markets during 2018, the observation cannot be ruled out. However, it is nothing more than the result of a recent bias.
Most of these so-called great high-quality chapters are trading at ridiculous valuations from which investors are very unlikely to get reasonable returns even in the next 3-5 years. The real opportunity lies in wider markets and emerging companies, where once again valuations have become reasonable (if not as cheap as in 2013) and at least these actions could be expected to mimic the growth of benefits without the risk of any significant valuation.
On previous occasions, when we recorded such a sharp drop in capital letters in such a short period of time, the investment had also been rapid. In addition, yields for the following one- and three-year periods have been above average.
Continue reading here: https://www.financialexpress.com/market/cafeinvest/nifty-at-record-high-dont-get-carried-away-real-opportunity-lies-in-smallcap-emerging-companies-stocks/ 1541298 /
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