Retail Investors Seek To Average Portfolios At Lower Levels Driving Stock Prices Higher
Retail investor portfolios were battered in the last few weeks as the bellwether nose-dived 13 percent in a month that saw many frontline stocks lose 10-50 percent
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Investors rushed to buy stocks at lower levels which drove stock prices higher bringing relief to thousands of investors. Retail investor portfolios were battered in the last few weeks as the bellwether nose-dived 13 percent in a month that saw many frontline stocks lose 10-50 percent. The carnage was particularly brutal in mid- and small-cap stocks where small retail investors are largely invested.
Marketmen point out that fall in the stock prices was seen as an opportunity to buy as the panic selling subsided and investors started to look at averaging their portfolios. Heavy buying was seen in some of the financial stocks that were at the centre of the selling spree even as stocks in sectors like auto and media were up handsomely on steady buying.
Bajaj Finance recovered 10.2 percent (Rs 2270.95), Bajaj Finserve 9.81% (Rs 5961.50), Eicher Motors 7.1% (Rs 22,582.35), Axis Bank 6.58% (Rs 589.20), Zee Entertainment 6.24% (Rs 459.80), SBI 5.97% (Rs 278.65), Hindustan Petroleum 5.52% (Rs 180.70) and Titan 5.21% (Rs 788.55) were among some of the prominent gainers.
The bellwether Sensex surged 461.42 points to 34,769.89 points providing relief to millions of investors. Retail investors were buying across all counters especially in small and mid-cap stocks. The Nifty Smallcap 100 and the Nifty Midcap 100 surged handsomely by 232.90 and 662.75 points, up 4.05 and 4.14% respectively.
Stocks such as Yes Bank, Maruti Suzuki, Motherson Sumi lost 44%, 26%, 22% respectively in the carnage at which point some savvy investors looked to average down their portfolios. The same stocks staged a smart recovery today rising 3-10 percent in today’s trade.
Some marketmen liken the current fall to the discount sale that is currently going on among the e-retailers. Market experts reckon that whenever stocks fall sharply and are down more than 30 percent, it provides a good opportunity to average prices at lower levels. Stocks bought at lower levels bring down the value of the overall portfolio thus allowing investors to lower their purchase prices.
Other market participants, however, view the recovery as a relief rally that may not have legs to sustain for long. Some of these participants still see red flags on the rupee which continues to remain week and firming crude prices that increase the current account deficit and puts pressure on payments. Rupee traded at Rs 74.20 to the dollar, while crude price hovered at $74.84 per barrel.