If you believe in the adage 'small is beautiful' as applied to the equity market, you must be talking about micro-cap companies. Micro-cap investing is luring investors with high-risk appetite with unmatched returns. The downside in micro-caps can be huge and at times there is lack of liquidity in the stocks, which essentially means that it may be difficult to liquidate the position. Now that is something called 'known risk' while investing in micro-cap companies. Investors who participate in equity markets are usually believed to understand the risks involved in investing.
The question is whether all the investors who participate in illiquid stocks accurately understand the risks involved.
Investors tend to focus on the return aspect more than the risks and hence end up getting disappointed with their investing experience. It is important to be an informed investor. SME investing, like micro-cap investing, has its own challenges and risk-reward equation. We have seen the action getting thicker, louder and broader as an increasing number of participants are getting active in the SME investing game. Recently, we have seen the market capitalisation for the SME stocks cross *60,000 crore on the BSE SME platform. This is quite a big achievement for the platform that was flagged off only in 2012.
The total number of stocks on the BSE SME platform as of today is 405. So far, 247 companies are listed on NSE Emerge and the total market capitalisation is about 35,375 crore for SME stocks listed on this platform. There are some unique promising stories in the SME space and then there are some boring and dull stories too that have destroyed wealth for investors. The perception is that very few people make money investing in equity markets and a lesser percentage of investors actually make money investing in SME stocks. Unless the rewards outweigh the risks, the investing theme will not work in the long term.
Denne historien er fra November 07, 2022-utgaven av Dalal Street Investment Journal.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra November 07, 2022-utgaven av Dalal Street Investment Journal.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
