Patience and discipline are key ingredients to successful investing in current market environment
Over the past two weeks, the local bourse remained under selling pressure marked by low market activity. Both retail and institutional investors remained by the sidelines, explained mainly by negative macroeconomic outlook and increased uncertainty as regards to forthcoming budget.
Investors remained sellers on the broad market, with main selling pressure on the hotels and sugar stocks. NMH, LUX and Sun ended the week lower and similar trend was noted for Alteo and Omnicane. For the year 2019, NMH and Alteo were the heaviest casualties, down by 15.5% and 17.3% respectively. To put this in perspective, the ailing and debt-laden airline operator Air Mauritius lost 15% in 2019.
Feedback from investors indicates that hotels and sugar stocks are currently the least favoured sectors, while interest remained focused on MCB. Despite the latter’s attractive valuation, the share has edged only by 1% this year, due to institutional investors such as pension funds are already overweight in MCB, while most retail investors regard the high price denomination of “Rs275.50 / share” as expensive, without understanding its valuation.
Such current environment has been witnessed by many experienced investors and patience and focusing on value stocks have proved the right ingredients to successful investing. Our current top picks include MCB and CIEL. Companies that could provide upside surprise in the upcoming 1Q19 results could include SBM, LUX and IBL. We recommend investors to gradually accumulate a well diversified portfolio of stocks and a monthly standing order could be the most suitable strategy. Please do contact our trade desk on 4338388 or 54293386 for more information.