Market Trends India News Get -BusinessShare; Reason for decline in mid-small cap stocks (buy or sell)
More than two-thirds of mid- and small-cap stocks listed on the National Stock Exchange (NSE) are down 20% or more from their respective 52-week highs. The main reason for the decline in mid- and small-cap stocks is their high valuation. Generally, there is a decline when the valuation is high.
Weak September quarter results and sales by foreign institutional investors (FIIs) also explain this situation. Until now, due to the bull market, investors could have made money from mid- and small-cap stocks, but now they need to pay attention to some fundamentals.
Which ones to keep and which ones to sell?
At the time of market correction, it is difficult to decide which stocks to hold and which to sell and make profits or exit them. Investors need to understand the difference between a price correction (decline) due to changing market conditions and a stock decline due to the company’s business problems. Selling good stocks is not the right strategy in case of temporary decline due to domestic and international issues. When to sell stocks, when to hold them, and when to buy them depends to some extent on the investor’s strategy and the condition of the stock. While deciding to buy, sell, hold or increase one’s investment in a stock, the market condition is important. And more attention needs to be paid to the fundamentals and value of the shares of the company concerned. It is possible that even if the market valuation is high, the valuation of a good stock is worth buying. Or, a stock has the potential to generate good profits even if the market falls.
When to sell?
Need for liquidity: If you are investing in the short term. If the stock is not losing money, you can sell it if necessary. Once the target is reached: If the price target set for the stock is reached, it must be sold or a profit must be recorded. is at the maximum. If the stock has peaked, you can exit. Unreasonable Profits: If a stock has gained more than 25% without any solid reason, then profit accounting should be done. Company Status: Promoters have a large number of them. If you are selling your shares, if the company is experiencing continued losses and market conditions are not favorable, then it is better to sell.
When to buy?
Good valuation: A good security is sold at a price lower than its real value (valuation). Or has fallen well below the 52-week high, so now is a good time to buy it. Financial results: Each listed company publishes its financial results every 3 months. If the estimates are good, you can buy stocks even before the quarterly results. Otherwise, you can buy stocks if the quarterly or annual results are good.When the IPO comes: If a reputable unlisted company launches its IPO, research the market situation. Then, after seeing its price on the gray market, you can decide to buy it.
When to hold?
Good company: Regardless of the market situation, if you own shares of a company whose profitability seems good. Its promoters are reputable people and its long-term prospects are good, so it is worth holding on to it rather than selling it. Long-term growth expectations: If the company shows good earnings growth over a period of more than three years, stay invested. Because the valuation of these stocks can quickly accelerate.Holding period: The holding period is important to get the most out of the investment. The length of time each stock is held may vary depending on the investor’s short- or long-term strategy.