If you have invested money in India's stock markets anytime during the course of the year, the chances are pretty high that as on today, you would be sitting on losses.
In fact, if you have invested in small and midcap stocks, the collateral damage would be even higher.
The only way to take money
There is only one way to make money and that is: "Buying low and selling high". If you buy stocks now, chances are you are almost certainly buying at lower levels. Why do we believe so? Just count the stocks that are 52-week lows. In fact, when have you seen seen stocks like Coal India hit Rs 198 or Karnataka Bank hit Rs 81. I a single day we have seen 400-odd stocks tough their 52-week lows.
Scores of stocks are available at multi-year lows and some even at lifetime lows. Dividend yields have even surpassed the 8 per cent mark, as in the case of a stock like IndiaBulls Housing.
Not many have the guts though
We all know that stock prices are at abysmal lows. However, the fear of the market falling even lower from here is the fear most have in their minds. It can fall lower, but, not significantly. In fact, at some stage there is going to be a recovery. The best time to buy is when everybody is fearful and possibly this is the time, especially for those looking at long-term investment.
There is a high possibility that the RBI will cut interest rates later this week and this may lead to a revival in the economy, if there are successive rate cuts.
Look for opportunities in the broader market
Index stocks are not going to fetch great returns anytime soon. Investors have to look at the midcap, small cap and the broader markets as a whole. Small cap stocks in particular have the potential to rally very sharply.
In fact, they have been hammered down to such an extent, that it is difficult to believe there would be a significant downfall from here.
Some of the midcaps as mentioned earlier also offer an excellent dividend yield. A classic example is Karnataka Bank, where the yields have now grow to 4.5 per cent. However, one needs to be a little cautious before buying.
Stimulus and FPI issues likely to be resolved
It might also be that some long pending issues like tax surcharge on foreign Portfolio Investors would be resolved. One may recall that Union Finance Minister, Nirmala Sitharaman had levied a surcharge on the super rich. This also became applicable to some of thees investors who have been registered as trust. Since they have to pay a surcharge that have been aggressively selling in the Indian markets and booking profits.
If this surcharge is withdrawn, we will see a sharp recovery in the markets. There is also a high possibility that we might see some stimulus in the next few weeks to revive the economy. This may lead to some sharp recovery in the market.