Art Of Selling, Quality Investment And More: Govind Parikh Shares His Market Mantra

Ace investor Govind Parikh, in a conversation with NDTV Profit, shared insights from his over four-decade-long journey of investing in the Indian markets. He recommended young investors to focus on quality investment, while also learning the art of selling.

"Art of selling is more important than anything else. The asset you have is paper asset, so you should know when and how to encash," said the market veteran, who is also the managing director of Govind Parikh Securities Pvt.

Explaining the art of selling, Parikh said that if someone is buying a scrip of Rs 100, then the target price in his mind should be of Rs 150. But when it reaches Rs 150 and the chatter around that stock grows, then people decide to hold it till it reaches Rs 300. "Here, people make a mistake," he said.

"Investors should not go by the chatter around that stock... they should do a thorough research and ask themselves whether it will really reach Rs 300. If yes, then hold the stock. If not, then one should encash it," he added.

Parikh noted that his mantra for navigating the bull market is to "sell, regret and go rich", rather than waiting perpetually with all the accumulated stock for the market to rise further.

"When you sell, and the price goes up, you regret for a while because a bull run is underway. However, after some time, the price will come down and you realise that you became rich (due to profit booking)," he explained.

Although this strategy may lead to regrets over missed additional upsides, it protects the investment from downside risks and allows realisation of profit.

Parikh also believes that one should trim their holding in certain stocks when the market "goes up crazily". "When everyone starts asking what to buy, then at that time, we sell a little bit. This is done from a risk management point of view, as the cash collected at such a time is always going to be helpful," he said.

Focus On Quality Investments

Parikh stressed that investors should "not lose focus on quality investments". One should should do as much research as possible in the company they are looking to invest in, he said.

Before buying the stock, the research should be on the company's fundamentals, rather than going by the chatter around the stock, he suggested.

In his view, said Parikh, one should give preference to buy stocks of companies with good management, as "good management matters more than good industry".

The market expert also highlighted the importance of keeping cash in one's portfolio, as it allows to mop up stocks at attractive valuations at times of market correction.

"In 2008, the Nifty crashed 50% in six months...Unfortunately, I didn't have enough cash to buy at those attractive valuations. After that, I decided to keep at least 10% cash in our portfolio," Parikh said.

The learning from 2008 helped during the market crash following the Covid-19 outbreak in 2020, he said, adding he had then bought stocks at low valuations. "The lesson is always expect the unexpected to happen, and keep cash with you."

On the recent correction seen in the Indian market over the past few months, Parikh suggested that it was similar to six-month-long corrections that have been seen earlier. He is "extremely bullish" of a rebound.