Goldman Sachs strategists estimate the S&P 500 will end 2023 at 4000 points, as I write this the S&P is at 4027 levels. The same report also see the benchmark Stoxx Europe 600 finishing about 4% higher from current levels.
What does this mean. Will the markets be stagnant for a year. As we all should know the markets do not behave in this manner. If the strategists are right the earning risks in the US could see the markets dropping by 12% to 20% in the first quarter of the year. All this might sound frightening but very few people realize that you make most of your money in a bear market.
The bear market is in full swing in the US. This will and already has had a effect in the IT space in India. One thing that you always focus in a bear market is quality companies with strong balance sheets and stable margins. Most of the IT companies are closer to their 52-week lows than the 52-week highs. Everyone yearns to collect high quality stocks at an attractive price, guess what the opportunity is right there. In the last 6 months we have been buying quality IT names and have also included a IT specific fund in our clients MF portfolio.
Some recent examples of Wiremesh recommending good value-based stocks buying when the chips are down has been Bector and La Opala. The biggest example is State Bank of India – The markets had hit a low in March 2020 and had started recovering from April onwards. State Bank was at @250 in March and dropped to 150 Levels by May (did not participate in the recovery and went further down) I was insistent that this was one of the biggest Value buys available at that time – Currently State bank is at 608. This is a staggering 280% return (@120% CAGR) from a blue-chip large cap.
I do not really like to talk about market levels, from an Indian context I see the markets outperforming the global peers. Bouts of sharp Global volatility will also affect the Indian markets with the IT and Pharma sector being most vulnerable. See this as a opportunity, use the value buying adage, do your homework, be disciplined, have a plan, buy some of the Quality companies and be patient. Remember We must all suffer one of the two things: The Pain Of Discipline or The Pain Of Regret
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