It's Time To Exit From 'Those' Stocks!

Were you among the investors who sold stocks during the recent market panic, or shouldn’t you have followed the herd mentality? In the unpredictable world of stock markets, recognising the opportune moment to sell can be as crucial as identifying the right time to buy. Mandar Wagh delves into the concepts of intrinsic value and overvaluation, offering insights into strategies investors can employ when their stocks are deemed overvalued

- Mandar Wagh

What an exceptional fiscal year it has been for the domestic stock markets, wouldn’t you agree? With the Indian benchmark indices BSE Sensex and Nifty 50 surging by around 30 per cent, and broader indices experiencing an astounding growth of over 60 per cent each, the pervasive investor optimism was unmistakably evident throughout the preceding financial year. In March 2024, significant selling pressure was observed across the broader markets, notably affecting power, energy, real estate, railway, and PSU stocks. This could be attributed to profit booking following sustained strong rallies or could reflect a cautious response to remarks from the SEBI chief warning about market bubbles and stock overvaluations.

While some market experts concurred with these concerns, others like Uday Kotak, Founder and Director of Kotak Mahindra Bank, expressed a different perspective. Kotak stated that he believes the market is not approaching the bubble territory. He acknowledged the presence of some frothiness, but emphasised that it is not yet out of control. Nevertheless, as informed investors, it’s prudent to re-evaluate our portfolios to safeguard against potential bubble bursts and mitigate potential losses. Let’s begin by comprehending the necessity of selling ‘those’ stocks at this moment!

Understanding Intrinsic Worth and Market Evaluations