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  • Market strategy: Grin and bear it

    Publish date: 3rd July, 2018

    “The middle path is the way to wisdom”. The famous poet Rumi’s rumination embodies this week’s game plan in the stock exchanges.

    In our June 28 report, we had pointed out the problem of “extreme valuations” that has gripped our growth stocks. The fascination for growth stocks increased recently due to the uncertain macro energies swirling around us. However, the idea to rely on overvalued but safe stocks in turbulent times can lead to an overvalued portfolio.

    What we suggest is that you adopt the barbell approach — a fine balancing act of picking growth stocks and value stocks. In fact, we believe there is potential in value stocks with strong business models.


    A quick glance at the market will tell you that the exchanges are currently bloated. The detailed report compiled by us also indicates how the Indian market continues to remain way above the average level. In such times, inexpensive value options can be an ideal way to remedy your overvalued portfolio.

    However, there is still some value in growth stocks if you look beyond the consumption sector. The recent sharp correction means that the banking and IT sectors are actually showing promise.

    Factors to keep an eye on:

    The ongoing trade war and rise in crude prices are two key issues that can pose hurdles in future. But any such movement will adversely impact the economy as a whole.

    The Indian government’s decision to cap fuel prices is also another factor that can hurt public limited companies.


    As mentioned earlier, there are growth stocks that still retain value. But building a mid-cap portfolio can benefit in the long run. You can go through the power utilities and financial service sectors to pick strong value stocks. The Exhibit 13 in our detailed report will give you an even better idea.

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