INSUBCONTINENT EXCLUSIVE:
If the breadth of the market is being dominated by the bears, the bull camp still has bluechips by their side.
That said, the pessimists
might have a clear upper hand with the haze over the economy and corporate earnings only thickening, making it tough for investors to wade
through it.
The sticky situation has prompted many investors - especially portfolio managers - to change tack, leading to a lot of
unlearning of the investment philosophies they had clung on to in recent years
Some of the behavioural changes reflect their confusion about the length of this slowdown
invest in small companies that would grow in value
Invariably, the race ended up with investors picking companies with low market cap of around Rs 500-700 crore or less
The violent sell-off in these shares has, however, shaken this trend off
Market cap is no longer among the most critical aspects of stock picking
Many portfolio managers are loading up on bigger companies with market cap of at least Rs 5,000-10,000 crore in their portfolios, which also
make their holdings liquid
Small-caps are being picked on parameters other than its market value.
MILDER PORTFOLIO CONCENTRATIONThose who swore by the importance of
holding a concentrated portfolio two years ago have diluted their philosophy
The trigger for this is the sharp erosion of share value of various companies because of scams or high debt levels
When the conditions were less risk-averse, brave-hearts preferred to hold fewer stocks of bigger size to maximise returns
Now, no portfolio manager or investor wants to be caught on the wrong foot with one out of the 8-10 stocks in portfolio seeing an 80-90%
The idea is to ensure that there is limited loss of capital
The focus has shifted from higher returns to better risk management.
STRICTER ANALYTICAL RIGOURA senior broker with a penchant for Wall
in a bull market when all stocks rise, the challenge is not to pick stocks but to control greed
But, in a bear market, the skill lies in buying stocks based on stricter analytical rigour
While investors mostly used a few profitability ratios and rich earnings forecasts to back their stock purchases, the process is much more
stringent with the inclusion of risk, cash flow and dividend metrices
For instance, Price to Earnings (P/E) ratio, which is the most popular ratio in a bull market, is widely mistrusted in a pessimistic
environment.
BLIND FAITH TO BROKEN TRUSTGone are the days when market participants and company managements were inseparable bedfellows
Many analysts and investors are unwilling to stick their necks out to back companies with even a slight dubious record.
The market chatter
is some of the promoters, whose company shares have taken a beating, are luring potential investors and analysts with goodies
But, with the tide turning, very few want to take any chances.
These are just a few notable instances of changing investor behaviour
They are aware that many of these tighter set of processes might prove to be futile if an auditor resigns overnight or a whistle-blower