Post-Budget checklist: A look at how heroics of Indian cricketers can help you in trading

• Follow

Post-Budget, the stock markets are on a roll. Days before the Union Budget, Chief Economic Advisor Krishnamurthy Subramanian gave a hint of what was going to unfold by recalling the heroics of Cheteshwar Pujara and Rishabh Pant at Gabba and hinting that their batting styles may unfold in the Budget.

However, there was a little twist. While the budget surely provides hope of long-term stability to the economy, a la Pujara, the equities market appears to have started playing a swashbuckling innings, the way Pant batted to take India over the line in Brisbane.

The stock market seems to be a celebratory mood. The BSE Sensex has jumped 3511.95 points in two trading days to close at 49,797.72 after touching the 50,000 mark once again on Tuesday, while Nifty-50 gained 1013.25 points during the two days to close at 14,647.72. Both indices are a whisker away from their life-time highs.

Does the equity market play over the past two days make you feel like jumping in the fray? If you have been an equity investor, these are certainly times that should make you look at the indices with glee and think about how to position yourself in the market for the future? Buy or sell? Would stock A or Stock B be good buys, both of which had spiked up massively post budget? Or is it stock C that has the most potential given the budget announcements, though it has not done so well post-budget?

Drawing from the cricketing analogy, here are a few points to keep in mind while trading in equities:

Prepare for the long haul: The equity investing game is a long one. You have to be prepared to be in it for the long haul. On the way there will be many ups and downs with the equity cycles playing out the way it did during the Australian series where India saw one of its lowest points having been bowled out for 36 in an innings to lose the first test only to bounce back and win the series. You have to have the staying power, especially during these periods of high valuation which holds the potential of a major pull back any time that could spoil the party. This is not a game for the weak hearted. There could be several setbacks on the way

Cut out the noise: You have to do your own research on the market and stocks before investing and not listen to every advice or ‘stock tip’ being doled out from everywhere. Remember how expert after expert had predicted a complete decimation of the Indian team down under after the first test. The team, however, had faith in itself and a plan in place that would eventually make them victorious.

Look for hidden gems: Little known names in the Test team — Washington Sundar, Navdeep Saini and Mohammed Siraj — emerged as some of the unlikely stars of the Indian victory. In your equity portfolio, you too should try and find some stocks that could provide blockbuster performance and turn out to be multi-baggers. This is a tough ask, but if you succeed to find some, you will surely be a winner!

Do not bank on stars: As a corollary to the above, if you pack your portfolio with only the better known names (big-caps) in the stock market that have given good returns in the past, your overall portfolio returns could be muted, though not necessarily disappointing. However, it might not be beating the index performance by much. Remember, in the Brisbane test, India had its biggest stars in the pavilion nursing injury or back home for personal reasons. The outperformance could be achieved without the presence of these stars.

Engage a good advisor: The stock market is a tough ground to play in and difficult to negotiate without expertise. The role of a good advisor who will help you pick the right stocks would be good. Didn’t the team give huge credit to how Head Coach Ravi Shastri helped them to negotiate the rough terrain after the Adelaide loss?