Its fantastic to see Sensex soar past 18000 levels today. My investment portfolio which continued to stay in red for major part in 2011 has seen some green recently. Its respite for even value investors like who buys shares to hold it forever. But I will accept that even my portfolio has some growth stocks that was in deep red in 2011. Most of the stocks in my portfolio has been bought at price levels that yields decent dividends. These are the stocks that I take extreme care in selecting. I call these stocks as my partner for a lifetime.

Investing in these stocks are done with utmost care. Both in terms of fundamental strength of company and its dividend paying philosophy but also in terms of timing the market. It is well known that high dividend yielding stocks of established companies (like ONGC, Tata Steel etc.) mostly trade at overvalued price. If one is invested to buy such stocks then timing the market to perfection is most important. I have taken care that during moments when Sensex was trading at 10,000 levels in 2009 or at 15000 levels in 2011, I managed to buy some dividend paying blue chip stocks at impressive dividend yielding levels. I am sure that at least I can rest assure to hold these stocks for minimum 15 years hence. These are the same stocks that is going to give me reasonable capital appreciation (at lease beating inflation) in moments I decide to sell them. For time being their fundamentals are so strong that the thought of selling them makes me sound foolish.

In addition to high dividend yielding stocks (for long term holding) I also managed to accumulate some growth stocks. As I am not so risk friendly investor I keep my choice of stocks fixed at financial stocks (like banks) or capital goods sector that I know well. These are those stocks that can give me above average capital appreciation in medium terms (5 years). Most of these stocks I have purchased were close to their 52w lows and trading at P/E ratio of 10 or below. I have also tried to buy only those growth stocks that have shown a steady growth of EPS last 3/5 years.

Its true that when stock market was playing spoil sport and most of the investors were panicking, investors like me were feeling greedy. I still remember that it was the moment when eurozone crisis was in breaking news and FII’s were booking profits in Indian stock market. In those times I was tracking some quality small cap stocks whose prices I saw getting halved in a matter of few months. I read the balance sheet and income statements of some of these stocks and found that their fundamentals remained unchanged but still their market price tumbled. So my layman’s logic told me that if price can tumble so badly then it can also be the reverse when market revives. I had some spare cash at that time which i could have locked for one year. I decided to buy some small cap stocks and let me tell you today I am seeing average 22% price appreciation in less than 6 months.

All in all a very carefully build investment portfolio now reaping its fruits. The small cap stocks that I have held for less than 6 months are ready to be sold soon. I am waiting for my averaged gains to be close to 25% and then I will sell them.

In medium term ( in next 2 years) I can see the GDP growth rate back to 8% levels, inflation coming down to 5% levels and rupee becoming strong again USD trading at 45 levels. In those moments my medium term holding stocks will start showing above averaged capital appreciation. At least I can expect 12% annualized growth of my holding.

It has been a real relief for me to see the sensex and nifty crossing 18000 and 5500 levels. I am not sure if market now has sufficient strength to maintain this optimism but for sure it has given me some good opportunity to capitalize my small cap holdings by selling them quick.

I know a lot of investors would be relieved to see the stock market revive. I will suggest my readers to be careful before going in a buying spree and GDP figures are not very encouraging. Even global clues coming from Europe is not very encouraging. Today I saw in news where America and Europe breaking some trade ties with Iran. In turn Iran also declaring that it will stop crude oil supply to America and some European counties like Greece, France etc. These are never good signs for stock market performance in long term. Until we have a trouble free world economics we cannot expect the bull phase to come soon. The world has seen enough of bearish market since 2008, now some positivity is due. I am hopeful and market is already beginning to show signs of revival

No related posts.