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During the bull-run of 2003-2007, stock-pickers concentrated on profit generated by companies. Investors rated companies based on valuation ratios such as price to earning (P/E) and return on equity (RoE). These are derived and dependent on profit reported by companies. Moreover, companies tend to diversify into various businesses — related or unrelated — to their present business activities during an economic boom.
It is during an economic slowdown, however, the focus gradually shifts to core business activities. In the present scenario of tight liquidity in the domestic and global markets, a strong and profitable business operation is the key to survival and growth for Indian companies.
Indian Stock Market
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