- Date : 12/10/2022
- Read: 5 mins
You might be tempted to bet on oil stocks because the Russia-Ukraine war will impact oil exports. However, tactical opportunities are not a good bet. Let's see why.
There are things you must do and must not do when you invest in the stock market. We talk about some of them here. Specifically about things you should never do in a stock market correction. Follow the points below and save that hard-earned money.
1. Chasing Tactical Opportunities Is a No
You might be tempted to bet on oil stocks because the Russia-Ukraine war will impact oil exports. However, it is not a good idea in the short run or the long. You can invest in stocks for the long term instead and choose good stocks that are highly reputed.
You might not have unlimited money and want to use your limited resources wisely. All your buying should come from education, study, valuations, and prospects, not tactical opportunities. You should also avoid investing in stocks at their 52-week lows or have crashed by 50%.
Also Read: How to handle the bear market?
2. See the Past Winners, and Don't be Greedy
The winners in one bull rally are not confirmed winners in the next. The next bull rally's winners can be completely different. It is more so at the moment because there are two significant changes on a macro level that drive it. Easy money and decreased rates of central banks drove the rally in the past 7-8 years. However, that is now changing. Stocks that will perform in a pro-growth environment, rising rate, and high inflation will differ from those that will perform in a low growth, easy money, and low-inflation environment. Covid has changed business and consumer behavior to add salt to the wounds. The "defensive" stocks like insurance, pharma, healthcare, and FMCG might see slow earnings and decreasing valuations.
You should buy small quantities of stocks and accumulate them with time. Don't use all your money in one go; use 1/4th or 2/4th of your money. Buy companies you constantly desire to buy after ensuring that their business model has not changed post-covid.
3. Do Not Sell
Experts have been saying for a long time that the easing of monetary policies by central banks has created a bubble that will burst soon. The markets look like they are crashing, and these experts are turning out to be correct. You might be tempted to save yourself financially by selling off your positions. However, you should not do so. The time to sell is when everyone is positive about the markets and not when the sentiment is negative. Be guided by valuations and not by index levels. The market is affected only by earnings in the long run, even though emotions and liquidity can be factors in the short run.
Let us see some infra stocks you should be looking at!
Meaning of Infrastructure
Infrastructure examples are physical systems of electric systems, water, sewage, communication networks, transportation systems, etc. These systems require a lot of capital, and investments of this level are essential for a nation's prosperity, economic development, and functioning. Infrastructure requires public-private partnerships or private or public funding.
Also Read: Best infra mutual funds in India
Types of Infrastructure
The different types of infrastructure are: -
- Soft Infrastructure: It is not as capital-intensive and ensures smooth functioning. Human capital drives it. Examples include law enforcement, healthcare, education, financial institutions, etc.
- Hard Infrastructure: These are physical systems that make a nation industrialized and modern. Examples include bridges, highways, roads, etc. It also includes the assets and capital required to make these functional and operational.
- Critical Infrastructure: Critical infrastructure is crucial for the functioning of an economy. It includes agriculture, public health, telecommunication, electricity, and energy, among other things.
8 Infra Stocks to Bet On
- Larsen & Toubro
- Adani Ports and SEZ
- GMR Infra.
- Dilip Buildcon
- Rites
- IRB Infra.Devl.
- Engineers India
- Ircon Intl.
Also Read: Is it time to invest?
These are the factors you should keep in mind when investing in the infra sector:
- Use ratios such as debt to EBITDA and debt-equity to assess the company's debt level and fix the same. Assess the company's debt levels because infra is a highly capital-intensive sector and requires regular cash infusion.
- Companies in the infra sector are involved in developing or constructing projects, and it is essential to see their order book to understand their cash flows.
- Calculate the company's return ratio, like ROCE or operating profit margins. Assess its revenue ratio and order book to see the revenue return. The higher the ratio, the better it is.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
There are things you must do and must not do when you invest in the stock market. We talk about some of them here. Specifically about things you should never do in a stock market correction. Follow the points below and save that hard-earned money.
1. Chasing Tactical Opportunities Is a No
You might be tempted to bet on oil stocks because the Russia-Ukraine war will impact oil exports. However, it is not a good idea in the short run or the long. You can invest in stocks for the long term instead and choose good stocks that are highly reputed.
You might not have unlimited money and want to use your limited resources wisely. All your buying should come from education, study, valuations, and prospects, not tactical opportunities. You should also avoid investing in stocks at their 52-week lows or have crashed by 50%.
Also Read: How to handle the bear market?
2. See the Past Winners, and Don't be Greedy
The winners in one bull rally are not confirmed winners in the next. The next bull rally's winners can be completely different. It is more so at the moment because there are two significant changes on a macro level that drive it. Easy money and decreased rates of central banks drove the rally in the past 7-8 years. However, that is now changing. Stocks that will perform in a pro-growth environment, rising rate, and high inflation will differ from those that will perform in a low growth, easy money, and low-inflation environment. Covid has changed business and consumer behavior to add salt to the wounds. The "defensive" stocks like insurance, pharma, healthcare, and FMCG might see slow earnings and decreasing valuations.
You should buy small quantities of stocks and accumulate them with time. Don't use all your money in one go; use 1/4th or 2/4th of your money. Buy companies you constantly desire to buy after ensuring that their business model has not changed post-covid.
3. Do Not Sell
Experts have been saying for a long time that the easing of monetary policies by central banks has created a bubble that will burst soon. The markets look like they are crashing, and these experts are turning out to be correct. You might be tempted to save yourself financially by selling off your positions. However, you should not do so. The time to sell is when everyone is positive about the markets and not when the sentiment is negative. Be guided by valuations and not by index levels. The market is affected only by earnings in the long run, even though emotions and liquidity can be factors in the short run.
Let us see some infra stocks you should be looking at!
Meaning of Infrastructure
Infrastructure examples are physical systems of electric systems, water, sewage, communication networks, transportation systems, etc. These systems require a lot of capital, and investments of this level are essential for a nation's prosperity, economic development, and functioning. Infrastructure requires public-private partnerships or private or public funding.
Also Read: Best infra mutual funds in India
Types of Infrastructure
The different types of infrastructure are: -
- Soft Infrastructure: It is not as capital-intensive and ensures smooth functioning. Human capital drives it. Examples include law enforcement, healthcare, education, financial institutions, etc.
- Hard Infrastructure: These are physical systems that make a nation industrialized and modern. Examples include bridges, highways, roads, etc. It also includes the assets and capital required to make these functional and operational.
- Critical Infrastructure: Critical infrastructure is crucial for the functioning of an economy. It includes agriculture, public health, telecommunication, electricity, and energy, among other things.
8 Infra Stocks to Bet On
- Larsen & Toubro
- Adani Ports and SEZ
- GMR Infra.
- Dilip Buildcon
- Rites
- IRB Infra.Devl.
- Engineers India
- Ircon Intl.
Also Read: Is it time to invest?
These are the factors you should keep in mind when investing in the infra sector:
- Use ratios such as debt to EBITDA and debt-equity to assess the company's debt level and fix the same. Assess the company's debt levels because infra is a highly capital-intensive sector and requires regular cash infusion.
- Companies in the infra sector are involved in developing or constructing projects, and it is essential to see their order book to understand their cash flows.
- Calculate the company's return ratio, like ROCE or operating profit margins. Assess its revenue ratio and order book to see the revenue return. The higher the ratio, the better it is.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
