1

I have a set of stocks in my portfolio (some are part of Nifty Index, mix of large/mid/small cap), but I observed that most of the times when the Index surges, my portfolio drops on that particular day and vice versa, and hence my below questions?

  1. Am I holding stocks that are not interesting/good value to other traders?
  2. Are my {maybe unpopular} stocks not aligned with the Indian economy?
  3. Are the other stocks good compared to what I own in my portfolio?

I don't understand why the stocks in my portfolio are increasing in price when the Index drops.

I see this scenario occurring when index drops up to 0.50 %.

If it drops more than 0.50 %, then my portfolio aligns somewhat with Index.

  • If you expect your portfolio to follow the stocks in the Nifty index... then you should buy a fund that tracks the Nifty index, not a different set of stocks. – RonJohn Dec 23 '19 at 6:49
  • I don't want my portfolio to follow Index, but, I am trying to understand how to align my portfolio with the overall sector or economy(Index fund in this case probably) – Sathish Dec 23 '19 at 7:32
  • Given that "overall" and "sector" contradict each other, the phrase "the overall sector" is... confusing. Are you looking for a set of stocks that track the whole Indian economy? – RonJohn Dec 23 '19 at 7:37
  • I am trying to understand on how to trend with the market and not get my portfolio beaten by Index funds. – Sathish Dec 23 '19 at 7:39
  • 1
    Look for a "total stock market" index fund. – RonJohn Dec 23 '19 at 8:24
4

Some stocks are not always correlated with the wider market. Effects on the level of a company can cause their stock to underperform or outperform compared to the wider market. For example, if a company had a particularly bad earnings release, it can drop 5%, 10%, 20%, or even more, even if the index (Nifty in this case) is up for the day.

I see this scenario occurring when index drops up to 0.50 %.

This can be attributed to the above explanation or just individual variance in daily stock performance.

If it drops more than 0.50 %, then my portfolio aligns somewhat with Index.

A significant move in an index can be a result of news about the wider economy as a whole, and everything will just go down in this case of bad news.

Most of the time, my portfolio drops when the index surges.

Look into the beta of your portfolio. Beta is a measure of correlation as compared to an underlying index. Your broker should provide this data but you can find the individual betas of your holdings with a Google search. For example, if your stock has a beta of 3, then when Nifty increases/decreases 1%, your stock will increase/decrease 3%. However, if your portfolio's overall beta is negative (as seems to be the case here), then it is possible (and maybe even expected) that your portfolio will move in an opposite direction to the index.

  • @Entelechois - thanks for your answer, My other question is that could it be that my portfolio has stocks that are not growth stocks based on the [current economic conditions or government visions] of the country – Sathish Dec 23 '19 at 7:36

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.