Tomorrow’s Equity

AFTER A YEAR where investors enjoyed double-digit gains across all asset classes—including gold, which delivered an extraordinary 30 per cent return—many are hoping for an encore in the coming year. However, the reality has been far less optimistic. Within just 12 trading sessions, indices dropped 2 per cent, leaving many unsettled.

What’s even more alarming is the sharp decline in small and midcap stocks. For instance, Kalyan Jewellers plummeted by 30 per cent, shak­ing investor confidence. Such volatility highlights why investing often feels like a loser’s game. It’s important that you’re not the loser. This means avoiding outsized risks that could wipe out your capital.

One common pitfall is trend investing. What’s trending today could be falling tomorrow. Consider the case of Kalyan Jewellers: over the past two calendar years (CY23 and CY24), the stock surged 116 per cent and 180 per cent, significantly outperforming the benchmark Sensex. However, such high-flying stocks often come with disproportionate risks, making them a dangerous bet for long-term investors.

The harsh reality is that the only truly ‘safe’ returns come from avoiding equities altogether. But for those determined to participate in the equity markets, focusing on largecap stocks offers a safer ap­proach. These companies may face cyclical or structural challenges but are less likely to experience catastrophic declines.

Take HDFC Bank and Asian Paints, for example. Once industry leaders, these stocks are now out of favour due to temporary head­winds but their strong fundamentals make them solid options for those looking to weather market turbulence.

For investors who want to avoid being losers this year, the strategy is simple: keep picking up large caps during every market correction. By doing so, you can end the year without significant losses and with a portfolio better prepared for the future.

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