It is an unbelievable rally in this stock, up almost 5x in a year, most of which has come in the past ten trading days-up over 60%! This seems surreal, even though I have been a big votary of its value realisation. See my earlier blogs( https://zerotomillion.business.blog/2021/05/26/is-bse-the-new-game/, https://zerotomillion.business.blog/2021/11/16/nse-beckons/ & https://zerotomillion.business.blog/2021/12/15/bse-is-the-new-game/)
However, when it cruised past 3000 and momentarily above 3100 intraday today, all I wanted was to burst out with joy but then decided to silently pat myself on the back and hold my emotions. However, when someone asked me ” aur kitna jayega”, I reply with my usual- it’s just started.
The more I read about stocks which went up in a Bull run, the more I realised that the worst mistake is to fold too soon in a rising market. For someone who bought Bajaj finance after its first 5x move from 2014 basically missed the next 10x move. In absolute terms, the money made in every double is more than the entire sum made earlier and this is the key. We’re not here to make money in percentage terms but to become millionaires in real terms. If you invest 5l and it goes up 3x, you’ve made 10l profits. However, the next 2x will give you additional 15l and that’s the key point to remember.
So how am I feeling today after this massive run? Well, it’s over 40% of my networth and I keep going back to how Nick Sleep must have felt when he put close to $10M in Amazon and saw it going up 20x and become over 80% of his networth/portfolio ( https://zerotomillion.business.blog/2021/08/10/building-an-investment-thesis/ )
For me, the shares of BSE are not for sale, not now, not ever. The idea to book profits out of a stock which has infinite potential to move up is the stupidest thing one can do. Ofcourse it’s coming out of a massive rally and at some point it too will fall, go through time and price corrections and everything else which happens in the market. However, I’m just too happy to have it for the next foreseeable future and beyond.
Let’s see what I believe is happening to this company. Over the past week, when markets went up around 3-4%, it’s up over 50% and with unprecedented volumes. And that’s without a shred of news or even rumor. This doesn’t happen often in market. Not on twitter, or in any media publication anyone has come anywhere close to even concoct an explanation. So what’s cooking!
My gut is that it has a lot to do with someone building massive position ahead of something we might see on NSE front. Now I’m only talking my gut here without any source or information whatsoever. What I believe is that there’s something to do with ongoing cleanup of NSE . The colocation scam is refusing to die out and the incumbent CEO is hanging up his boots. It sounds a lot like what happened with Yes Bank. Remember here that Yes Bank fell 30% in a day just on the news that Rana Kapoor wasn’t given an extension. There was no mention of any fraud or malpractices. We knew how it ended- down 98% in 18 odd months.
Now let’s take my logic test- here’s a company with over 5000cr net profits, growing revenue year after year with a massive lead over its only competition in equity derivatives and cash segment; grey market deals value the firm at over 2l crore and the CEO is basking in this glory. So why on earth is he refusing for a near guaranteed second term for five years? There are only two reasons possible – either he knows that the goose is cooked and want to leave with his reputation intact or he’s been shown the door by the regulator and in a face saving gesture saying he’s not seeking a second term. In either case, it fails the smell test.
Now take this a step forward. If NSE was a listed company, by how much would it’s share price fallen on the news that its former CEO was running a sham operation with a fellow who cooked up the dumbest email id for a yogi- rigyajursama@whatever.com( the userid is the three Vedas named consecutively). I mean this fellow didn’t even pretend to be intelligent. And to add, the incumbent CEO decided to quit. Well, Jubilant foods on the same news fell 15% today. And there are whispers of a SEBI refusal for any IPO in the near future and grey market valuations falling sharply. Couple this with the recurring technical glitches on NSE which doesn’t seem innocuous anymore.
NSE was created to bring BSE to size. The earlier BSE was a broker’s fiefdom. NSE was supposed to be the good boy ,a poster boy for India’s resurgent financial strength. However, the opposite has seem to occur. BSE has become the beacon of positive corporate governance and technical know-how. In almost all new products, BSE has beaten NSE fair and square. Be it commodities, INX at Gift City, mutual fund distribution through starmf, NSE hasn’t been able to garner any significant market share even after outspending BSE by a wide margin. And with its gold spot exchange and power exchange ready to commence, the blue ocean businesses are only going to take it from strength to strength.
One advantage BSE has was it’s miniscule institutional holding. This means now that it has performed well in a falling market, the funds- PMS, HNI and FII-DII will have to enter at some point to share the spoils lest they fail to explain as to why they never owned anything in a stock which has gone up 5x in less than a year. This means a lot more price stability on the upside going forward. Furthermore , it’s market cap is a paltry 13k crore even today. It’s not even a mid cap stock as per AMFI classification. Once it moves to the mid cap club, it’s impending inclusion by funds and indices, the real price movement, if it happens and I truly believe it will, surprise the most optimistic of us all.
Remember this, Bajaj Finance went up 50x in seven years when Nifty barely doubled. What a stock can do on the upside is beyond anybody’s imagination. Once you’ve hit a bonanza, the only thing which can kill it is you- by selling too early!
Stay invested, the India story has barely begun. If BSE succeeds in even getting a fifth of India’s energy derivatives and gold spot market, we don’t even know what gold we’re sitting on!
Life is all about Compounding! 