Synopsis
The stock market is about managing uncertainty, but there are times when this quotient is off the charts. In such times, it is better to use both quantitative and qualitative measures to reduce risk. Because, in equity as an asset class, risk cannot be eliminated. To reduce risk, look at companies with a certain level of RoCE and low debt. Check whether the company pays dividends regularly. Together, these things show the ability of a management to handle adverse business cycles. In our list today there is one company which has not paid dividends. But being in a sector like infrastructure, it is expected that dividends will not come as execution of projects requires a good amount of working capital.
It is always good to be ready for anything in the markets. But there are times when it becomes even more important (and also more difficult) to be ready. Ask anyone: Have they built in what will happen to the street if the tariffs are raised to 50% by President Trump on August 27? Or even beyond, as he has threatened? There is a high probability that because the Nifty and Sensex are not falling, nobody is thinking at this point of time on the
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