By Yogesh Chabria
The stock market has been hovering around the 19,000 to 20,000 mark for the last two weeks now. On one hand we have people celebrating the rapid rise of the Sensex. On the other hand, some feel left out for not being a part of this rally.
If we look closely, only a handful of index stocks have taken the market to these astronomical highs. Many small investors may not have gained much from this high. For instance, I know of people who have sold stocks such as RPL (Reliance Petroleum Limited) at Rs 100, a few months back and are feeling terrible -- because the price has crossed Rs 200 today. Had they remained invested, they could have benefited 100 per cent growth.
However, the fear of the market continues to persist. Investors constantly ask me, "Aren't prices just too high. Or can I invest at this time?"
Pick the bears
I just advise them to ignore the index and look for one rupee coins that are being sold for 50 paise. Even today, there are several sectors and companies with strong business fundamentals that have underperformed.
They have assets that are worth much more than the entire market cap and have great cash flows along with aggressive expansion plans. But their stock prices have not moved up.
Reason: the markets are imperfect in the short term. But eventually the fundamentals of such companies are quite likely to be discovered.
For instance, a while back this year, some folks invested in a company called Sesagoa, when the price stood at Rs 1,200. Very few were aware that it was a 'hot' stock. The price had stagnated for sometime, but it didn't matter to some because of its strong fundamentals and the iron ore mines it had. It was obvious that if the demand for steel goes up, iron ore prices will also rise.
Today Sesagoa's stock price is over Rs 3,500.
Similarly, even today no matter where the markets stands, you can always find companies that have a high value but low prices with excellent brand value too.
The best thing an investor should do in such a scenario is to look at sectors which have not participated in the rally at all. Look for companies with strong fundamentals and growing profits. Don't just follow the flock that are going up 10 per cent everyday. Instead look for one rupee coins that are being sold for 50 paise. It is one of the safest and least risky ways to create wealth.
One Rupee for 50 paise?
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