Play The Stock Market

There's currently no shortage of small-cap or large-cap names that investment groups consider attractive value stocks despite concerns about the credit markets and the overall volatility in stock prices. These are companies that trade at a low price to book, price to sales and/or price to earnings ratio, relative to their industry or to the market as a whole.

Looking at the stock market situation today it seems clear that a good bet would be on stocks of large-cap companies with a proven track record, high earnings visibility, low leverage, good book value, and low debt. Also, purchasing stocks with viable promoter holdings could be one of the considerations for stocks to buy now.

In the aftermath of the 2008 - 2009 economic downturn and fall in market prices, coupled with uncertainty over at least the first three quarters of 2010, it's most advisable to play it safe. Investing in the stocks of large companies with a consistent track-record may be conservative, but there are few poor conservatives.

If you're basically a retail investor, hold your horses for the time being. Sure, online stock trading has made it ridiculously easy to trade stocks faster than you can blink your eyes, but you can also tank even faster. What nobody ever says about online trading is that it's like compulsive gambling. When you start to lose, you get a compulsion to throw more money away chasing those first lost ducats.

Utilities are always good defensive plays, as there's always some amount of premium built in their valuations, and besides when was the last time a utility company went under? Construction is good, too, right now. It's a commodity-user industry that may get a boost from increased infrastructure spending, although there are some concerns about the funding of projects despite every bank in the country wanting to loan out money right now.

And speaking of them, amid easing of liquidity, low bond yields and hope of long-term economic revival, banking stocks are also seen as a good bet for investment -- both in the medium-term and long-term. The banking sector is expected to better the market, giving an on-average return of twenty per cent, according to analysts.

Regarding investment-worthy companies, brokerage houses are looking at the BSE (Bombay Stock Exchange) 500 (94 per cent of total market capitalization). It is very hot right now. BSE has excluded companies with high debt levels or feeble financials. Only those with an established track record, good earnings visibility, positive cash flows, and ability to erase debt are considered for listing, as they'll be in a better position to withstand tough times.