{"id":787,"date":"2021-07-01T10:32:14","date_gmt":"2021-07-01T10:32:14","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=787"},"modified":"2021-07-01T10:32:16","modified_gmt":"2021-07-01T10:32:16","slug":"why-should-you-stick-to-investing-in-market-leaders-only","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/why-should-you-stick-to-investing-in-market-leaders-only\/","title":{"rendered":"Why should you stick to investing in market leaders only?"},"content":{"rendered":"<div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div>\n<p>Before\ninvesting in any stock a fundamental investor scrutinize various qualitative\nand quantitative parameters to take an informed decision. Selection of a stock\nfor investing is a cumbersome task and requires blood and sweat before reaching\nto an optimal decision. An investor has to go through current and preceding\nyears financial statements to understand the context. The concept of investing\nbanks upon the investor\u2019s brainstorming. An industry that seems promising\nbecause of changing government rules or taste and preferences of general public\nor both creates a first move advantage for the investor. After determining an\ninvestment theme investors prepare a list of companies that are operating in\nthat industry. Usually, investors get struck with two ideas whether to invest\nin a small player that has the potential to turn into multi-bagger or to stick\nwith market leaders having proven consistency. <\/p>\n\n\n\n<p>There is no denying the fact that investors have made fortune by investing in little champs and have seen them grow multi-fold on the cost of investor\u2019s anxiety and sleepless nights. While, investing in market leaders provides an edge to investors. In times when broader market gets correct, market leaders correct less and foremost get the interest of investors. <\/p>\n\n\n\n<p>Must Read: <a href=\"https:\/\/www.invest19.com\/blog\/one-size-fits-all-doesnt-work-anymore-every-sector-has-different-parameter-to-scrutinize\/\">\u2018One size fits all\u2019 doesn\u2019t work anymore! Every sector has different parameter to scrutinize.<\/a><\/p>\n\n\n\n<p><strong>The changing investment style is claiming that \u2018Big Companies Become Bigger\u2019 and in order to support the statement we will discuss some parameters.<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Bargaining\npower over suppliers: <\/strong>Market leaders have higher production and sales\nfigure in comparison with small players. In order to augment high productivity\ncompanies require high amount of raw-materials. In times of inflation or less\nsupply of inputs small players don\u2019t get the raw-materials on time and at\nprevious prices to match the ongoing demand. However, due to purchase of heavy\nquantity of inputs market leaders possess a bargaining power due to which\nsuppliers provide them at similar prices or less increased rates on time. This does\nnot affect the operating cycle of company and hence their equilibrium to meet\nthe ongoing demand never gets interrupted.<\/li><li><strong>Excess\ncapacity to augment sudden rise in demand: <\/strong>Market leaders generally have\nmore fixed assets in terms of plant &amp; machinery and land for production.\nDue to high turnover and operating margins the market leaders increase their\ncapacity over a period of time. This facilitates them to utilize their spare\ncapacity in times when aggregate demand increases suddenly. Availability of\nexcess capacity helps them to grab the opportunity arise and make healthy bucks\non them.<\/li><li><strong>Easy\naccess to cheaper funds: <\/strong>As market leaders possess longer learning curve,\nhigh production numbers and sales volume it is effortless for them to fetch\nfunds at cheaper interest rate from corporate lenders. Corporate raise funds\nfor expansion, new ventures, capitalization on equity and to redeem current\ndebt on maturity. Access to finance at cheaper rates helps them to attain\nhigher Net Present Value. It also helps them to improve their working capital\nrequirements and operating margins.<\/li><li><strong>Higher\nFund inflows from institutional investors: <\/strong>Domestic and global\ninstitutional investors have market players on their prior preference of\ninvesting. Investment banks prefer to stick with market leaders due to high\nreliability, less volatility and consistent performance. Fund houses infuse\ntremendous liquidity in market leaders for a safer bet, compounded return and\nconsistent dividends.<\/li><\/ul>\n\n\n\n<p>Investing has become a critical phenomenon due to rising dependency on global markets, involvement of various asset classes and quick flow of headlines. Various institutional investors face these hurdles to determine an optimal investment strategy. For retail investors, safeguard of capital is the foremost priority in comparison with making handsome returns. Therefore, retail investors should stick to investing in market leaders only.<\/p>\n\n\n\n<p>Also Read: <a href=\"https:\/\/www.invest19.com\/blog\/reliance-unveiled-their-future-plans-in-its-44th-agm-how-will-they-bring-revolution-in-indian-economy\/\">Reliance unveiled their future plans in its 44th AGM! How will they bring revolution in Indian economy?<\/a><\/p>\n<div class='epvc-post-count'><span class='epvc-eye'><\/span>  <span class=\"epvc-count\"> 2,721<\/span><\/div><div class=\"pld-like-dislike-wrap pld-template-1\">\n    <div class=\"pld-like-wrap  pld-common-wrap\">\n    <a href=\"javascript:void(0);\" class=\"pld-like-trigger pld-like-dislike-trigger \" title=\"\" data-post-id=\"787\" data-trigger-type=\"like\" data-restriction=\"ip\" data-ip-check=\"0\" data-user-check=\"1\">\n                        <i class=\"fas fa-thumbs-up\"><\/i>\n                    <\/a>\n    <span class=\"pld-like-count-wrap pld-count-wrap\">11    <\/span>\n<\/div><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Before investing in any stock a fundamental investor scrutinize various qualitative and quantitative parameters to take an informed decision. Selection of a stock for investing [&hellip;] <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/www.invest19.com\/blog\/why-should-you-stick-to-investing-in-market-leaders-only\/\">Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":788,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,12],"tags":[],"class_list":["post-787","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","category-investment","category-wealth-management"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=787"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/787\/revisions"}],"predecessor-version":[{"id":789,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/787\/revisions\/789"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/788"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}