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New-Age Businesses Drive Change In Valuations

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New-Age Businesses Drive Change In Valuations
Rajiv Ranjan Singh - 29 October 2021
The practice of arriving at a valuation and valuing a company is as old as the modern stock market. Evaluating a company involves multiple parameters and formulae but evaluating a market is more complex and sometimes confounds even the veterans. This is because markets are influenced not only by the businesses they include but also by the psychographics and moods of the investors. While understanding the markets requires a multi-dimensional approach, amateur practitioners usually tend to adopt a linear tactic, focusing on a single aspect such as the fundamental, technical or quant methodology, and ignore the other pieces of the puzzle. For example, the conundrum of the Indian stock market touching new highs every week has confounded the amateurs but not the veterans. The one-way surge of the Indian stock market since March 2020 has confused market practitioners who follow only fundamental analysis before investing. In this calendar year, the market hit new highs almost every week, and till the time of going to print, there had been no meaningful market correction (over 5 per cent)...
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