Diwali 2023: This is the way to construct a market portfolio, according to Parag Parikh MF's Rajeev Thakkar

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BSE Sensex surpassed 67,900. While going ahead, experts expect volatility in the near term, they have an overall positive outlook for the Indian equity market, especially in the long term.

In this volatile market scenario and on the back of the upcoming festival Diwali where major investors consider starting new investments, Parag Parikh Financial Advisory Services (PPFAS) Mutual Fund's (MF) Chief Investment Officer and Director Rajeev Thakkar has come out with a letter to investors advising how to construct a strong portfolio and the way one should approach doing it. In the letter, Thakkar noted that when they are looking to construct portfolio, they try to select attractive investment opportunities for the portfolio.

According to the expert, attractive investment opportunities are companies that have great promoters / managers who are aligned with the minority shareholders' interests, are capable and competent in their business and work steadily towards creating long-term wealth for shareholders. “A great business is defined as one that creates good returns on Invested Capital, which does not need too much borrowing, and has some long-term competitive advantage," Thakkar said, adding that one should also make sure the shares are available at reasonable valuations.

"When we apply the above filters, there are many sectors/companies which do not qualify. We do not invest in those.

Just investing in companies or sectors that are seen to have attractive growth prospects due to policy changes or other sources of volume growth is not a sure-shot formula for investing success," advised the expert. He further highlighted that Benjamin Graham wrote many decades ago in “The Intelligent Investor" and drew two morals for its