Snapping their three-day losing streak, the benchmark indices settled around 1 per cent higher on Friday ahead of the outcome of state exit polls due later in the day.
That apart, market will also closely watch the outcome of OPEC-Russia meet, which is expected to come later in the day.
The S&P BSE Sensex climbed 361 points or 1.02 per cent to settle at 35,673 while NSE’s Nifty50 index added 93 points or 0.87 per cent to end at 10,694.
Among sectoral indices, the Nifty Bank index rose 1.5 per cent led by a rise in ICICI Bank and HDFC Bank. The Nifty Auto index, too, rose 0.9 per cent led by Bajaj Auto and Maruti Suzuki.
In the broader markets, the S&P BSE MidCap index rose 0.2 per cent to end at 14,717, while the S&P BSE SmallCap index slipped 0.3 per cent to 14,105.
On the political front, market participants are awaiting exit poll results of five state elections due after market hours today. The result of the assembly elections will likely set the tone for the general elections next year.
The rupee traded on a firm note during the day rising to 70.45 against the US dollar amid fall in oil prices ahead of the crucial OPEC meet outcome. The domestic unit on Thursday closed at 70.90.
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If you question how ‘boring’ can be beautiful, you have been following the wrong investment strategy.
Too many people have the misconception that investing is glamorous. The reality is that glamour is the last thing you will find in the stock market, most especially if you plan on being successful.
Hedge fund guru, George Soros sums it up brilliantly: “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”
Sure, we have all heard of a stock market success story or two. You probably have an acquaintance who made a decent return from investing in a tech stock that tripled in price before selling. Maybe even someone who inadvertently timed the 2008-09 crash correctly. In most cases, these successes are short-lived and can be attributed to pure luck. Although these ‘successful investing’ stories make for good dinner-party conversation, they are by far the exception among prosperous independent investors.
The fact is investors who produce the flashiest returns, time and time again, usually do so in the most unglamorous manner. A great example is Warren Buffett, who built an empire investing in so-called ‘boring’ stocks.
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In February 2000, a financial advisor named Bob Markman wrote an article that got a huge amount of attention online. Called “A Whole Lot of Bull*#%!” (that’s how the original was spelt) and published by Worth magazine, the article attacked the idea of diversification, arguing that any money put into currently underperforming investments was money wasted. Internet and other technology stocks had been so hot for so long that nothing else was worth owning, Markman argued. He was far from alone in saying that.
Markman and I exchanged long emails and even longer letters (that’s how people communicated in those Neolithic days), but the “debate” boiled down to one point: Can the typical investor predict the future with precision, or not? Markman insisted the answer was yes. I felt then, as I still do, that the answer was no.
In Markman’s defence, there is a case to be made that if you have inside knowledge or superior analytical ability, then you should bet most or all of your money to capitalize on it. Warren Buffett and Charlie Munger have long argued exactly that. If you are as analytically brilliant as Buffett or Munger, diversification will lower your returns. The rest of us, however, should have much less courage about our convictions. And inside knowledge or superior analytical ability are best applied to individual securities, not to broad market views.
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The domestic equity market signed off the first day of December F&O series on a positive note on Friday amid buying in pharmaceutical, information technology (IT) and automobile counters.
The S&P BSE Sensex ended at 36,194, up 24 points, or 0.1 per cent, while the broader Nifty50 index settled at 10,877, up 18 points, or 0.2 per cent.
In the broader market, the S&P BSE MidCap rose 0.6 per cent to settle at 15,039 levels, while the S&P BSE SmallCap settled 0.5 per cent higher at 14,427 levels.
The rupee traded on a firm note on Friday, rising to 69.59 against the US dollar in intra-day trade on the back of free fall in crude prices and heavy buying by foreign institutional investors (FIIs). The domestic unit on Thursday had breached the 70-mark for the first time since August 27 to end at a three-month high of 69.85 per US dollar.
Reliance Communications (RCom) rose 13 per cent to Rs 14.40 on the National Stock Exchange (NSE) on Friday after the Supreme Court asked RCom to furnish a corporate guarantee of Rs 14 billion within two days to get the No Objection Certificate (NOC) from the government. The corporate guarantee will be issued by Reliance Realty Ltd, a wholly-owned subsidiary of RCom.
The Nifty Pharma index rose 2 per cent led by a rise in shares of Biocon and Dr. Reddy’s Laboratories. The Nifty IT index gained 1.2 per cent led by Infosys and Tata Consultancy Services (TCS).
YES Bank ended 6.3 per cent higher at Rs 170.50 after a TV report said that the private bank’s promotor Rana Kapoor doesn’t have any ownership in Morgan Credits or Yes Capital.
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If you were a Hillary Clinton supporter, every statement by Donald Trump fortified your faith that he would lose the election, and you took the consensus of polls as proof she would win. Mr. Trump gave supporters reason to think he’d chasten Wall Street, and as the election approached, pundits predicted a market meltdown if Mr. Trump won. Yet the S&P 500 has returned more than 5% since his election.
Ever since Nov. 8, voters have been scrambling from all sides to avoid admitting that we were wrong. If that requires fibbing to ourselves, so be it.
Likewise, instead of opening their minds to the possibility of being wrong, investors often wall themselves off from new information that could threaten their views.
When the U.S. stock market produced its worst start to a year in modern history, losing 10.5% in January and early February, terms like “contagion,” “panic” and “fear and loathing” filled the air. Stocks promptly shot up.
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Some years ago Seth Klarman gave a fantastic speech at the MIT Sloan Investment Management Club. During his speech Klarman suggested that the mainstream approach to investing has is backwards saying:
“Right at the core, the mainstream has it backwards. Warren Buffett often quips that the first rule of investing is to not lose money, and the second rule is to not forget the first rule. Yet few investors approach the world with such a strict standard of risk avoidance. For 25 years, my firm has strived to not lose money—successfully for 24 of those 25 years—and, by investing cautiously and not losing, ample returns have been generated. Had we strived to generate high returns, I am certain that we would have allowed excessive risk into the portfolio—and with risk comes losses.”
He went on to discuss how you can successfully exploit opportunities by remaining calm, cautious and focused in the manic world of investing. Here is an excerpt from that speech:
As the father of value investing, Benjamin Graham, advised in 1934, smart investors look to the market not as a guide for what to do but as a creator of opportunity. The excessive exuberance and panic of others generate mispricings that can be exploited by those who are able to keep their wits about them.
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On Thursday, the benchmark indices fell for the third consecutive session, settling over 0.5 per cent lower led by fall in banking and metal stocks. The S&P BSE Sensex ended at 34,981, down 219 points or 0.6 per cent, while the broader Nifty50 index settled at 10,527, down 73 points or 0.7 per cent.
The BSE and the National Stock Exchange (NSE) are closed for trade on Friday, on account of Gurunanak Jayanti. All wholesale commodity markets, including metal and bullion, are also closed. The forex and commodity futures markets, too, will not trade.
It was a negative end for the market in this truncated week with the Nifty giving up 10,550-mark.
Private banks were major contributors to the Nifty Bank’s underperformance. Telecom pack, too, saw some pressure. Consumption, energy, metals, and pharma saw the most losses after banks, while selling was visible in the midcaps space.
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There are a number of letters that I look forward to reading each year. Some of them are well known and Buffett’s are, of course, a classic example. There are also others that have added enormous value to my thinking over the years, and that have opened my eyes to many new and varied investment opportunities. They have also helped me spot emerging themes, new ideas, thought processes and mental models. I mentioned Buffett because his 2011 letter is a case in point. In that Buffett recommended reading Jamie Dimon’s annual letters. And it’s little wonder; Buffett has said this about Dimon in the past…
“I think he knows more about markets than probably anybody you could find in the world.”
Jamie Dimon, the son of a stockbroker, has been at the helm of JP Morgan [and it’s predecessor firm ‘Bank One’] since March 2000. In that time the tangible book value has compounded at 11.8%pa vs 5.2%pa for the S&P500. Not surprisingly, the stock price has followed, delivering a 12.4%pa return vs the S&P500’s 5.2%pa over that period. A cumulative gain of 691% versus 147% for the S&P500. Not bad considering the multitude of challenges that have faced global banks over that period, including the worst financial crisis since the Great Depression.
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The most important factor which determines if you successfully deal with a selloff is how you are positioned before one. When faced with a correction or a bear market your portfolio’s risk needs to be properly set to your personality, age, goals, savings and overall position in your life. It’s very tempting when starting a portfolio to take more risk when stocks are moving up and less risk when stocks are moving down. However, if you’re investing for the long term, there will be many of both scenarios. You need to visualize how you’d react when you make 20% in a year or lose 30% in 6 months. When deciding on the amount of risk you’re willing to take, one of the most important aspects is to avoid basing your choice on where you think the market will go up or down in the short term. You need to have a baseline plan for all markets to avoid scenarios where you panic. It’s easy to panic when you don’t have a plan in place. If your risk profile is wrong, you will likely underperform. Taking too much risk can cause quick painful losses. If you switch to a more conservative approach after you lost money, it will be difficult to make the money back.
Stay Disciplined
No matter how much you plan or how closely your portfolio matches your risk profile, if you want to go against your plan on a whim of a decision, it’s possible. There can be some circumstances where you need to wait a defined period before you can get your money back, but eventually, you will be able to. You can override your personal financial advisor if you have one and you can take your money out of passive funds at inopportune times if you are making emotionally charged investing decisions. These are all mistakes you can make if you don’t follow through on your discipline. Recognizing you have the freedom to mess up your finances is daunting for some people who aren’t experienced. The key for inexperienced and even experienced investors is to take a methodical approach rather than being reactionary.
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The benchmark indices ended over 0.5 per cent higher led by a rise in the financial stocks and Reliance Industries (RIL).
The S&P BSE Sensex ended at 35,457, up 197 points (0.56 per cent), while the broader Nifty50 index settled at 10,682, up 66 points (0.62 per cent). In the broader markets, the S&P BSE MidCap index ended flat at 14,998, while the S&P BSE SmallCap slipped 0.4 per cent to end at 14,486.
Among sectoral indices, the Nifty PSU Bank index settled 2 per cent higher led by Oriental Bank of Commerce and Bank of India.
The rupee traded on a firm note on Friday rising to 71.71 per US dollar in intra-day trade, up from its previous close of 71.98 against the greenback.
Shares of RIL on Friday rose 2.7 per cent to Rs 1,127 on the BSE helping the oil-to-telecom major pip Tata Consultancy Services (TCS) to become the most-valued company in terms of market capitalisation. On the BSE, RIL’s market capitalisation was at Rs 7,14,668.54 crore, while India’s largest IT firm by revenue TCS slipped to the second spot with a valuation of Rs 7,06,292.61 crore.
Shares of Rallis India, Deepak Fertilisers & Chemicals, Dixon Technologies (India), Hexaware Technologies, Take Solutions and BASF were among 22 stocks from the S&P BSE Allcap index hitting their respective 52-week lows on Friday in intra-day trade.
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