Two hugely underperforming stocks set for a big turnaround?

livemint.com:

Subscribe to enjoy similar stories. Timing the markets is often the key to success in stock trading. While some traders believe in bottom-up stock picking, where you focus on individual company fundamentals first, others swear by the top-down approach.

The top-down approach begins with broader sectors before narrowing down to individual stocks within those sectors. Starting with the sectors, analysing the outperformers and underperformers is the first step a trader follows. Some traders focus on outperforming sectors, investing in continuing momentum, while others target underperforming sectors, hoping for a reversal or recovery.

Both strategies have their own risk profiles—outperforming sectors tend to carry lower risk due to the ongoing momentum. In contrast, underperforming sectors carry higher risks as you invest in a turnaround with little or no current market support. In this article, we look at an underperforming sector that presents a potentially lucrative opportunity for risk-tolerant traders - the media sector.

Despite its poor performance in recent years, let us explore why this sector may present an opportunity for those willing to take risks. Over the last five years, the Nifty Media index has significantly lagged behind the broader market. While the Nifty 50 index has rallied more than 100% during this period, the Nifty Media index is still trading at levels seen in 2019 despite a thriving broader market.