If you noticed Reliance falling almost ten percent on Friday and went around scratching your head as to how something like that happens, well, let’s just say it did better than ONGC and Oil India for the day. And if you tried finding answers on Twitter or TV, you’d have come across something called a Windfall Tax. What it did was to ensure our faith in the PSU was dented, again as who’d want almost a year of gain knocked out in a day?
So now let’s decipher the news share some views and then move on to what I have been up to. The government said since these oil refiners are milking a lot of money turning crude oil into marketable products, let’s ask them to share some part of those excessive profits with itself and try and solve a couple of problems simultaneously – help the government manage an impending Current Account deficit by discouraging exports of crude produced locally which could be used for domestic consumption, thus reducing the need for importing similar quantities at a much higher price. This might also help cool the inflation which to be honest is at a much more manageable level in India than in the West.
Noble objective, right? Yes. It only had some collateral damage in the form of carnage in share prices of some companies as I mentioned. Well, we missed something equally important. The government raised taxes, shares tumbled but markets ended in Green! It was very bad news to be honest but markets recovered. If it was any other day, the market would have sinked but it didn’t. I sense this is the beginning of the end of this fall we have experienced over the past nine months.
A lot of people have begun to dig out the fact that the FIIs still have close to $500 Billion of equity exposure left in India so it can go a lot worse from here. This is crying in the face of an impending catastrophe, the end of the world if you will. What I truly believe is what Seth Klarman told us- the world doesn’t end that easily. Let me share what I feel sums it up all, so well
Coming back to my portfolio – I’m now crawling back from an almost 25% cut at the bottom and now I believe I should say, only a 25% cut! One thing which I learnt this year is to avoid stocks where one policy decision can kill the story and thus, I’m out of IOC, ONGC,OIL, NALCO etc.
I’m now running quite a concentrated bet wherein the game is clear- it’s a bet on rising India, both on the consumption and investment side. This theme took a beating last year when all the asset management companies and broking stocks are down in dumps and we are now being asked to not come anywhere close to them. Well, this is exactly the time when you can buy great stuff at such prices. I believe in three years we can look back and say, those who bought it in 2022….
Life is all about Compounding! 