Monday, 7 May 2012

Is It The Right Time To Invest In Stocks?

Every Tom, Dick and Harry has this question "Is it the Right Time To Buy Stocks"?.  Along with this question they also have an answer with them. The Answer is either "YES" or "NO".    "YES” – would be the answer if they are waiting for an opportunity to get into the stock market  and "NO" for all those who want to get into the market but don’t have the risk appetite or liquid cash in hand. Do you agree?
What could be the reason for this craze?  Well Time and again it has been proved that there is no better place to make money than stock Market. You ask the above question to economic experts or Financial Analyst's, they will have an hour explanation on why they think "NOW IS THE RIGHT TIME" to Invest in stock market. Reasons put forth by them may vary. Some of the commonly quoted reasons are.
Greece Debt Crisis, Rupee is trading all time low, Inflation concerns, Domestic and International slowdown, rising oil prices, unstable political conditions, etc etc. These are primary reasons for the huge correction in the Sensex or Index Stocks. They further mention that, many of the Blue Chip Companies have corrected 40% to 50% from their Year High. Some experts go an extra mile and say “worst is almost over and economy is on the path of recovery”.
For investors this is best opportunity to buy stocks as many good quality stocks are trading at dirt cheap price. Buying at low prices will give you chance of gaining dramatic returns in case the economy starts recovering.
Some other news channel would air similar message, "Long Term Investors" should start buying stocks NOW as A Grade stocks are trading at 50% discount. Investors with Long Term Horizon can expect satisfactory returns in long run. To support their say they will furnish facts like below chart.
 May 7, 2012 (Rs) May 04, 2011 (Rs) (%) LOW (Rs)
GTL LTD 34.55418-91.70%418 / 29 
SINTEX IND. 64179-64.20%193 / 62 
EVEREST KANTO CYLINDER 28.779-63.70%95 / 25 
JAI CORP LTD 61.9164.05-62.30%164 / 48 
GUJ.NRE COKE 19.2550-61.50%52 / 15 
JAIN IRRIGATION 76.4180-57.60%188 / 79 
EDUCOMP SOLUTIONS 185434-57.40%478 / 174 
SUZLON ENERGY 21.949.95-56.20%55 / 18 
NCC LTD 43.1597.5-55.70%101 / 32 
ADANI ENTERPR. 277.25625.95-55.70%760 / 266 
SHREE RENUKA SUGARS 31.1569.5-55.20%75 / 24 
HOUSING DEV. INFRA 75.45154-51.00%179 / 54 
CROMPTON GREAVES 127.2250-49.10%276 / 109 
INDIABULLS REAL EST 60.55116-47.80%125 / 44 
SHIPPING CORP. 59.55107.5-44.60%109 / 48 
INDIAN OVERSEAS BANK 84151-44.40%157 / 74 
BHEL 226403.2-43.90%415 / 224 
HINDALCO 115.85204.5-43.30%205 / 114 
STERLITE IND. 103174.9-41.10%175 / 88 
RELIANCE CAPITAL 316.55532-40.50%609 / 237 
SAIL 93.6156.25-40.10%157 / 74 
SESA GOA LTD 184306-39.90%306 / 155 
UNITECH 22.8536.5-37.40%37 / 18 
THERMAX LTD 417.5652.25-36.00%675 / 395 
BIOCON LTD 233.9360.6-35.10%380 / 229 
NALCO 59.892.05-35.00%94 / 49 
NMDC LTD 173.5265.3-34.60%278 / 140 
ABAN OFFSHORE 392596.9-34.30%615 / 332 
WELSPUN CORP 122.8185.25-33.70%192 / 66 
PANTALOON 164246.6-33.50%347 / 128 
CENTRAL BANK 87.8132-33.50%132 / 65 
VOLTAS 109.9163.05-32.60%172 / 73 


Going through this chart one can clearly infer that YES, indeed stocks are trading at good discount from their year High price. Finally you are kind of almost convinced that "Now Is The Right Time To Invest In Stocks".  There comes the final Googly, investors are advised to maintain strict stop loss.  Investor !!! Did you get your Answer?
Well what if somebody had asked me the same question "IS IT The Right Time to Invest in Stocks". My Answer would have been pretty simple "I Don’t Know". 
Take Away : "Is It Right Time To Buy Stocks" ? The answer for this question cannot be common to all. In case you are young and have some cash in hand, it does make sense to invest into stocks of good companies that are trading at fair value. Investment should be done in SIP Mode. If you are heading towards your retirement then you should stay away from stocks.
Self Evaluation or Your Risk appetite should help you in arriving at the right answer. Do you agree?


Surinder Nibhanupudi said...

Agree with your outlook. The markets have indeed taken a beating over the last couple of years. But will the stocks you have mentioned go up? Quite unlikely. The stocks you mentioned are quite risky. Fundamental investing says that the the best stocks to invest in are always those that are good businesses and are undervalued. Whether a company is good or not you can know by going to money works for which is a fundamental investing website through and through.

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