In the last two months of the market, while the midcaps have done well, though the pace at which the outperformance was taking place has slowed down. So, there is a profit booking taking place in different parts and sectors. Part of this profit booking is due to the fact the valuations are high and probability that it would continue. At this point of time one should also focus on reducing risk.In reducing market risks, investors should integrate both quantitative and qualitative criteria to assess stocks, aligning expectations with realistic market performances and avoiding impulsive shifts based on short-term fluctuations. This involves a disciplined approach to examining fundamentals, particularly focusing on crucial financial ratios such as Return on Equity (ROE) and Return on Capital Employed (ROCE). These measures help in evaluating a company's efficiency and profitability, guiding investors away from making hasty decisions which are mostly done in a bullish market.
