As the heading suggest, Corporate Governance has now taken the front seat in the market. Companies with good ethical practices, transparent management & takes care of minority shareholders are getting premium valuations. Look at the case of Infosys which is at Life Time High in this turbulent market. Same is with Tata Steel which has a good track record. This fall should certainly be a wake up call for investors who compromise on quality. Sensex is down 6-7% from its recent high which was made near Diwali. But Mid-cap & Small-Cap index is down 13% & 17% respectively. IT sector is up 3% and Real-estate is down 27% from its high. Similar thing happened in January 2009 when Satyam scam broke out and Small & Midcaps were hammered. But as public’s memory is very short the bad quality stocks started moving up within two-three months.
The other issue which I want to highlight is in this bad phase of market we should not loose confidence as the prospects are intact. We had a good double digit IIP growth for the month of October. Good stocks have also taken a beating & so there is an opportunity to do bottom fishing. The best & easiest way to get good returns is to invest through SIP (Systematic Investment Plan) where one regularly invests without timing the market. A market timer earns less as against time given in the market.
Remember Best is yet to come for Indian markets.
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