The year 2018 was a rollercoaster ride for Indian stock markets. From a high of 38,989.65 points in August 2018, it fell to a low of 33,291.58 in October 2018 as a result of huge correction in the last few months.
There were multiple factors behind the market correction such as US-China trade war, rising crude prices, falling rupee, US-North Korea tensions and state elections to name a few. But even in those difficult times, there were few sectors that outperformed.
As per data available on 31st Dec 2018, the IT sector was a clear winner among all other sectors with 23.17% gains. FMCG and financial services sectors took the 2nd and 3rd position with 13.65% gains and 10.65% respectively.
On the other hand, underperformers list include realty, media and auto sectors.
As we step into the New Year, every investor is curious to know the best stock advice practice for the year 2019. The one question that looms large across the mind of investors is about investments in the sector that would give the best returns. In short, which sectors are likely to outperform in 2019.
With general elections due in 2019, we can expect a lot of ups and downs. So what would be the best stock advice for investing in 2019?
Given the market volatility, the FMCG sector that gave 13.65% gains in 2018, is likely to continue its uptrend because irrespective of the outcome of the elections, trade war or crude prices, the demand for consumer products like soaps, shampoos, detergents or packaged food products are never going to cease.
In fact, due to the changing trends, FMCG companies are finding bigger markets in rural areas. Hence, this sector looks quite promising for the year 2019.
Apart from the FMCG sector, we are also bullish on infrastructure and financial services.
Don’t just rely on the stock Advice. Become an Informed Investor too.
It is said that the best advice is to act on the one that you give to others. Sadly that is not true in the case of stock advice because most people who give stock advice, hardly know the rationale behind investing in a stock and blindly give stock advice, which they themselves receive from others.
That is why it is very important for every investor to understand how the stock market works and become an informed investor rather than blindly depending on stock advice from others.
So how does one become an informed investor?
The answer to this is quite simple. By understanding the factors which move the stock markets and stock prices.
Listen To Stock Advice, But Invest Only In The Right Business
It is very important to invest in the right businesses and it is even more important to know why you are investing in it. Because when your investment is based on research you know it will withstand any kind of market volatility in the short term and give you outstanding returns in the long term.
Let’s understand this better with the help of an example of the stock of Maruti Suzuki.
Maruti Suzuki’s shares which were was listed in 2003 for a price of Rs.123 touched a high of Rs.10, 000 in Dec 2017 generating a massive return of 8000%. This happened inspite of the global recession of 2008, and multiple corrections in the last 15 years.
So what makes Maruti Suzuki’s stock such an outperformer?
The secret lies in its robust fundamentals such as:
- Market leadership in the passenger car segment with more than 50% market share
- Unmatched product offerings, plant capacity and economies of large scale
- The largest network of sales & services network across India
- Huge investments for improving R&D
- Consistent growth in earnings
- Zero debt
Given these strengths, the stock of Maruti Suzuki has further growth potential. That’s why it is very important to invest in the right businesses.
Separate Good Stock Advice From Bad, Be Patient And Sticks To Your Beliefs
After investing in the right businesses it very important to wait patiently. By doing so you are in essence giving time for the business to grow and realize its true potential.
Do you know Warren Buffet earned 99.7% of his after his 52nd birthday? He started buying stocks at the age of 11 and built his fortune slowly with most of his wealth coming in his 50’s.
Sticking to your belief after investing in a business is very important because during the period taken by a stock to achieve its true potential there will be moments of uncertainty due changes to business and market cycles. In such situations, one may hear lot of incorrect stock advice and negative news about the businesses in which you have invested, suggesting that it is time to exit.
It is very essential to stay away from such rumors and give less importance to price movements & focus more on the business fundamentals; the actual reason behind investing in a business.
A word of caution related to stock advice though. Even among sectors, there are certain companies which may outperform or underperform. Hence many best stock advisory companies advise investing in high-quality stocks in a methodical way.
Elections are still four to five months away. But the pre-election jitters are already evident. In such uncertain times, it best to seek stock advice services of best stock advisory companies before investing inequities.
But among a market clouded with thousands of best stock advisory companies, how do you ensure if the company is offering the most suitable and unbiased stock advice services as per your risk appetite and financial objectives?
Here’s a checklist that can help you find the best stock advisory companies:
- Is the stock advisory company SEBI registered?
- What is their past performance?
- Are they able to provide stock advice services even during tough market conditions?
- Is this advisory company following a rigorous research process while shortlisting the investment opportunities and offering stock advice services to you?
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Read more: How Long-term investing helps create life-changing wealth – TOI.