Corrections and bear markets are a part of the stock market investing game. You need to be willing to tolerate volatility if you want to capitalise on the amazing opportunities of wealth creation that the stock market provides. As opposed to trying to avoid market corrections, investors with a long term horizon should capitalise on the opportunity to buy five-star rated equity mutual funds and blue chip shares at conveniently low NAV and stock price respectively. Even though the Indian benchmark index S&P BSE Sensex has corrected nearly 7.5% from the start of the year, our advice to investors would be to invest in good equity mutual funds through the systematic plan route on a regular basis for long term wealth accumulation. And yes, retail investors should absolutely not discontinue their SIP’s or existing equity allocations in this market mayhem.
After being weak for the most of the week, Friday witnessed a smart Up move with the Indian stock market in a firm bull grip. All the sectors recovered smartly staying in the green zone till the closing bell. The Nifty surged to close 145 points up at 7,422 level while the Sensex was up by a whopping 473 points to close at 24,435 levels. Both the indices, the BSE Sensex and the NSE Nifty closed in the positive territory being up around 2% each. Top 5 Nifty gainers were Gail, Maruti Suzuki, M&M, Tata Steel and Hindalco. On the other hand, the top 5 Nifty losers were Idea Cellular, Bharti Airtel, Bosch, Hindustan Unilever and Grasim. Technically, Nifty closing above 7,400 levels is a positive indicator for further trade but looking at the current market scenario, traders and investors are advised to stay cautious at higher levels.
Mindtree is a focused mid-tier IT Services and Digital company growing at a healthy 17% CAGR growth rate over the last 5 years. The company has been investing hugely in the digital business to sustain higher revenue growth and superior profit margins for the next couple of years. Mindtree’s Q3 FY16 revenue was above market expectations as the company was able to contain the effect of the Chennai floods which had a minor impact on the revenue. The company has recently appointed Rostow, current head of Europe as the CEO and MD from April 2016, thus ensuring change and continuity.
The company expects Q4 FY16 to be better than the last quarter as the management is confident of beating the Nasscom guidance on the back of higher sales and profit margins. Higher earnings estimates for FY16 and FY17 on the back of organic growth momentum and deal wins make Mindtree a preferred pick in terms of fundamentals among the mid cap IT space. The stock currently trades on the Indian bourses at Rs 1,450 cum bonus of one free equity share against one held. Investors can purchase the Mindtree stock for at least 40% price appreciation over the next one year.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.