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[hfe_template id='11223'] [ad_1] Synopsis There are 20 reasons/ explanations/ justifications put on the table for every move the market makes. Especially now, as the Nifty and Sensex recover from five months of correction. These explanations have their own role in the stock market, and it is sometimes good to listen to them. But, whether it is small-caps or mid-caps or large-caps, earnings and their stability are what finally matters in the market. And earnings are dependent on growth potential as well as the ability of the management to deliver growth. So, as the market recovers, focus on two things. First, whether there was a slowdown in the earnings of the company. And if yes, whether a recovery has taken place in Q4. There is a high probability that, as the Nifty and Sensex recover, a number of investors are looking to increase their exposure to stocks once again. For all of them it is time to remember the basic reality of equity investing. When you buy a stock, you ...

[hfe_template id='11223'] [ad_1] Synopsis At about this time last year, everyone from regulators to policymakers to masters of the market were cautioning against exposure to small-cap stocks. Did anyone pay heed? Probably not. Today, a large majority is feeling the pinch. There is an inverse relationship between many elements of the stock market and it is more complex than what we assume it to be. So, as small-caps see their worst performance of the last few months, it’s probably a good time to look at the logic of investing in the segment. Remember: Just because they are small-caps, they are not all bad. At the same time, when there is euphoria, all of them don't become good One problem with investing in small-caps is that there are so many inverse relationships between different variables that it becomes too difficult to figure out which equation to believe at what point of time. Just to put this in perspective: Was August 2024 the best time to buy small-cap stocks...

[hfe_template id='11223'] [ad_1] Synopsis Anyone who doubts that volatility and bearishness hit small-caps stocks more than others should check what happened to some of them in these four months of correction. Small-cap stocks do have a higher element of risk. But if you take care of a few things before investing, it will go a long way in ensuring that you get that extra return for the extra risk taken. Also, understand a simple fact. Small-cap stocks are highly volatile, with price swings amplified by limited trading volumes. So, when they are rising don’t assume that it is all about fundamental improvement in the business and vice versa. Like other parts of the markets, even the small-cap space is witnessing correction. This time, however, it is more orderly as compared to the past. What can change things, is global risk off trade. If there is a bout of selling which comes because global equity markets get into risk off mode (as they did in early August 2024) then ever...

[hfe_template id='11223'] [ad_1] Synopsis As bulls make a comeback, the small-cap segment is again witnessing increased activity coupled with positive market breadth. So, while being bullish may not be a bad idea, there are two things you need to be aware of as an investor. First, the risks are higher because valuations are still high. Second, when the correction comes, small-caps face a liquidity hit more than any other segment of the street. If you still want to increase exposure to small-cap stocks, do it with money you will not require in the short term. Because, in the short term, small-caps could come under pressure. But in the long term, they are capable of delivering – provided enough filters have been applied while selecting them. In the last four trading sessions, both the Nifty and Sensex have moved upward – along with improved market breadth. There are clear signs that the bulls are making a comeback attempt. Does this mean the volatility phase is over? Or ju...

[hfe_template id='11223'] [ad_1] Synopsis Never forget us. That is the message bears have for the street since the beginning of October. Be that as it may, should one equate what is happening on the street with businesses? The answer is no. When there is a strong sentiment on the street – whether bullish or bearish – we tend to forget one simple thing: Owning stocks means owning part of a business. At this point, if you sell a stock where the underlying business is doing fine, the chances are you will regret the decision. Stock prices are impacted in the short term by many things that have nothing to do with the underlying business. Businesses, on the other hand, are impacted by factors which are very different. So before taking any decision, focus on the business. The bears are back, reminding us yet again that they just hibernate – and don't really leave the street. Will they be around for some more time, putting pressure on stock prices? Yes, they may. But investo...