Buy stocks which falls less to protect portfolio: Ashwani Gujral

In a chat with ET Now, Ashwani Gujral, Chief Market Strategist, ashwanigujral.com (Technical Check), shares his views on sugar stocks.

ET Now: Just a quick sum up on how one could be looking at protecting their portfolio at this point?

Ashwani Gujral: Portfolio protection needs to be done by buying stocks, which do not fall a lot. So, we need to be positioned in Hindustan Lever, Idea, Bharti and those type of stocks, which will fall less in this decline. To buy a certain mid-cap thinking that this is the level that it hit sometime back is no justification because it could fall another 30% by moving lower.

On the other hand we have fallen so much that I do not think buying puts today is useful because we will lose out on time value. If there is a rally back up, we will lose on value of the puts. The only way to do it is either cash or move into stocks, which are not overleveraged or where demand will remain steady even if the economy slows down. So, there is no other way we can protect portfolios in this decline.