Stock Markets have seen high volatile move in last 5 months and Stocks have seen big corrections also.
Record-high inflation levels, dented prospects of corporate profitability and likelihood of contraction in economic growth continue to batter equities, which, according to analysts, are set to remain volatile in the near-term amid global liquidity withdrawal.
Investors should remain calm in these turbulent times without taking aggressive positions. Calibrated buying on declines in small quantities in high quality stocks with preference for value over growth would be a good investment strategy.
Its raining rate hikes: The Reserve Bank of India joined global central banks in raising interest rates as it hiked the key repo rate by 90 bps,The move has severely dented investor confidence as borrowing costs are set to rise for producers and consumers alike, and liquidity of over Rs 160K crores will be drawn out of the banking system , due to the 90 bps increase in CRR rates.
As we have seen 17% Correction in MIDCAP stocks last week and few of Quality MIDCAP Stocks are back in buying range based on 52 Week High Stratergy.
The 52-week high/low levels, wherein the stock or index crosses one-year high/low, are considered vital indicators in markets as breaching these levels are seen as a confirmation that the trend is likely to continue, with ferocity, in the respective direction.
Investors and traders believe that the stock crossing the 52-week high or low level has a firm underlying strength / weakness, which may lead to a secular movement in the counter. In general, 52-week high represents a resistance level and 52-week low the support levels, and their breach is considered a key for trend to continue
52-Weeks High Effect in Stocks
The “52-week high effect” states that stocks with prices close to the 52-week highs have better subsequent returns than stocks with prices far from the 52–week highs. Investors use the 52-week high as an “anchor” which they value stocks against. When stock prices are near the 52-week high, investors are unwilling to bid the price all the way to the fundamental value. As a result, investors’ under-react when stock prices approach the 52-week high, and this creates the 52-week high effect.
Below are the List of Stocks of MIDCAP Index and % away from their respective 52 Week High. Stocks which have seen dip till 10-20% should be added in the Portfolio. Link for Google Docs