What is it with this jump of 500+ points in the sensex today? I thought we were going into a lull with the upcoming holiday season. But why worry if the stock market seems to be in a hurry. I took some rates from my broker and I realised that it is these ver few large cap stocks which took the whole index up today! I think this could be another platform for a broadbased rally. Whatever happened to those interest rate hike fears?!
I think this move calls for caution. The quarterly results in the next month will see a lot of shuffling in portfolios. So, if one has been discounting the FY10 results with high growth rates, I think this will be the time to start getting weary of the valuations. After all, who has ever bought them at the lowest prices and sold them at the highest?! So, keeping a close watch! By the way, I have fewer companies in my portfolio than at the beginning of this month! So I am on my way!

There is this IPO, DB Corp, which really interests me. This team of management is excellent in theor field work before the launch and they have met with huge successes in Maharashtra and M.P. They have been the number one selling daily from day one in M.P and the number two selling daily in Maharashtra. They have repeated this feat even in Gujarat. Now they have ventured into English dailies called the DNA. There are however some issues such as brand ownership, which is a subject of dispute by some family mambers and also their high debt which is a worry. However, the debt levels seem to be coming down year after year. So, "give it a try"!, is just what I have thought.

I have been enjoying the strength displayed by the mid caps recently. Like any retail investor, I too have my portfolio biased towards mid caps. I had read in a website www.damodaran.com about the general performance of mid caps in any market. The annualised returns are higher than that of large caps when tabulated for over 7 to 8 year periods. Also the rally in mid caps usually gathers steam between longer time intervals. This means that if one aims to get better returns as compared to the large caps, then one has to hold on to mid caps for a longer period of time. The risk associated with such a strategy is that every now and then, some of these mid caps throw some negative surprises, which the markets swiftly discount and tear them apart. A good example would be Subex Azure. Once regarded as a quality mid cap stock in the IT space, today two thirds of the company is owned by creditors. The quest for fast growth lead the company to one huge acquisition because of which the debt has spiralled and the shareholders have lost tremendous wealth even in bull market periods. The lesson I have learnt: "You better be very choosy when you enter a mid cap stock". But of course sometimes greed takes control and I do buy some small caps, although with sound fundamentals. I just keep adding to my conviction while my average returns are taken care of by some good large cap stocks and one or two high flying mid caps