4. Avoid Value Traps

If a stock is trading on low tariffs year-on-year, probabilities are high that it is not a good buy. PSU banks are trading at a third of their book values and PEs of 2-3 and analysts believe they can fall further.

The surge of bad macroeconomic conditions has played chaos with stock prices in the recent months. Though the famed indices have handled the situation and are managing to hold their heads above water, mid-cap and small-cap stocks have witnessed a major fall. Many of these are trading close to their 2008 levels.

5. Don’t Touch Companies in Debt

It is anticipated that companies having a large foreign debt will face higher pressure in this uncertain market. Therefore it is preferable to stay off the course and do not buy stocks of such companies.

The sharp fall in rupee has many connotations for the market. As it influences dollar returns, falling currency affects investments by foreign investors, a dominant force in the Indian markets.

A slipping rupee will also add to the burden for companies with foreign debt and can lead to value destruction.

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