What a run we have seen, both before the Exit Polls result & after it!! The initial part of the rally was limited to large-cap stocks only. But over the last 2-3 days we have seen several mid-cap & small-cap stocks rally big time, hitting upper circuits regularly. Most of these stocks are from the Infrastructure & Power sectors. Many of these companies have been struggling on the business front over the last few years. Hence their stocks were heavily beaten down, some even to penny stock levels. But it seems now they have got a new lease of life and they are back from the dead. Have a look at the chart below where you can see the sudden jump in stock prices of 4 such companies.
These are just 4 companies here, but I think hundreds of such companies have seen their share prices rally anywhere between 20% to 100% over just the last one week to 10 days. All of them are flying away on HOPE. Yes, even I am hoping for things to improve for our country as a whole, which will give big opportunities for companies from various sectors, especially those that are required from the nation building perspective. But let me warn you, things will not change overnight. It will take atleast 6 to 12 months for things to get moving. There are lot's of things that Modi & his would-be Finance Minister will need to look into before they start planning & implementing things that would give momentum to large projects from Power & Infrastructure sector. Remember that our country is running a huge Deficit Budget. We will have to curtail expenditure on certain non-productive areas and divert that money to areas which will prove to be productive.
In short I just wish to warn everyone that one shouldn't get exuberant and invest blindly into stocks that are flying away. When all this euphoria settles down, things will be compared in terms of actual improvement in performance of companies & their corresponding valuations. Wait for a correction to Invest fresh money. And if one is already invested in any of these 'flying' companies, then do think of booking atleast partial profits and then reinvest during the next correction. You might get the same stuff at 20% or 30% lower prices in some time.
These are just 4 companies here, but I think hundreds of such companies have seen their share prices rally anywhere between 20% to 100% over just the last one week to 10 days. All of them are flying away on HOPE. Yes, even I am hoping for things to improve for our country as a whole, which will give big opportunities for companies from various sectors, especially those that are required from the nation building perspective. But let me warn you, things will not change overnight. It will take atleast 6 to 12 months for things to get moving. There are lot's of things that Modi & his would-be Finance Minister will need to look into before they start planning & implementing things that would give momentum to large projects from Power & Infrastructure sector. Remember that our country is running a huge Deficit Budget. We will have to curtail expenditure on certain non-productive areas and divert that money to areas which will prove to be productive.
In short I just wish to warn everyone that one shouldn't get exuberant and invest blindly into stocks that are flying away. When all this euphoria settles down, things will be compared in terms of actual improvement in performance of companies & their corresponding valuations. Wait for a correction to Invest fresh money. And if one is already invested in any of these 'flying' companies, then do think of booking atleast partial profits and then reinvest during the next correction. You might get the same stuff at 20% or 30% lower prices in some time.
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