Where to invest when the Stock Market is at Historical High?
Equity markets look unstoppable, sentiments has been improved and Equity Index hitting the new benchmarks and record high on daily basis, despite the macro economy data is not that impressive (Even the Manufacturing PMI reading in October is at 19 Month Low)
Government is taking lot of measures to review the economy like slashing the corporate tax, unveiling 25000 Cr AIF for distressed Real Estate Sector Etc.
But the million dollar question is
- Will this momentum sustain?
- Where to Invest at this Juncture?
Morgan Stanley has raised the target for S&P BSE Sensex to 45000 by June 2020, they estimate that the corporate tax cuts has helped the corporate to raise earning growth to 25% in FY 20 and 23% in FY 21.
Growth Stocks Vs Value Stocks
If you are an investor looking for a 3 year investment horizon, then choose to invest in Value stocks than in Growth Stocks when the markets are all time high at this juncture.
You can consider investing in stocks like SBI, NTPC, Infosys, ITC, Powergrid whose price to book value is low and it offers high potential of returns over long term than Growth Stocks.
These stocks carry lesser risk than the broader market stocks and priced below the similar companies in the industry.
History always suggests that the value stocks outperform growth stocks on the recovery market on the Risk Adjusted Basis.
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