Smallcap 100, Weekly - We have had a steep runup since March with 6th continuous month of serious gains. The trigger that caused this runup was cheap Russian crude, strong Rupee, easing inflation and relatively benign macro. Some of it at least might be changing just as we near crucial resistance in the smallcap indices - usd-inr breaching 83 (not a big problem of a runaway decline since we have good reserves and can defend), crude breaching 90 and russia crude imports declining in Aug, as Russia has cut production. So most of what to me were good positives when market seemed to be bottoming last week of March are now reversing and that too right post a frenzied runup in everything.
I think its better to be cautious with fresh entries and not run after sub-par bets - either lacking in quality of business or in risk:reward in terms of valuation. The only good valuation bets either lack a good earnings trigger and the ones that have good earnings trigger are fully priced in. This is not an easy market for great gains. I feel its better to unwind bets and not go down the quality curve in new bets (which is what I feel has happened with some of my picks lately).
The other signs in terms of fresh issues, block deals, SME market, microcap focused funds, all indicate we are getting too greedy. That doesn’t mean we reverse anytime soon though. When market topped out in Oct '21, it took several months before actual decline started in Jan '22. Everytime it retests tops, it can make you feel like a fool, so a strong bull market like we have had is not going to reverse overnight I feel. Any sign of liquidity vanishing and market depth shrinking will be a good indicator (I see market leverage is already at an ATH)
I intend to hold PML since its more a purely fundamental bet for me but wind down some of my other bets which are fairly valued or appear topping out/exhausted.
Disc: Writing helps me gain clarity and is not advice