Okay so this has been a pretty fantastic two weeks for the markets in general and portfolios in particular. We’ll see how things are shaping up and why I still am so optimistic!
First, the rally from 16800 to 17800 in just over seven trading sessions has provided a much needed relief to all investors who have seen their portfolios bleed red for the past one and a half year. The last uptrend which saw Nifty hit life highs in December just had nothing for the broader markets and my own portfolio was down 20% from the previous peak. It meant that the upswing was just index massaging and nobody really benefitted. The positive beta this time is almost +80-100% in portfolios which meant that while markets have moved 5%, portfolios are up almost 10-12%. The last week of March was pretty scary when I for a moment did fear if I’m going to go down an additional ten percent!
What I’m trying to say is that this rally is almost neglected. People are so scared and so convinced of an eventual downswing that everyone and their uncle aren’t participating. This is what I pointed out in a previous post that the skepticism index is sky high. Everyone is waiting for a correction they’re damn sure about. Most importantly, nobody wants to burn their hands buying another dip when it’s almost certain to go down, again! This is exactly how a new bull run takes birth- amidst pessimistic disbelief. Nobody is sure they can ever make money buying stocks and everyone wants to lock the best FD rates and add the glitter of gold to their holdings.
So my big call is that we’re due for a mega run, which is always my base case. Just look at monthly SIP numbers but for which we would have seen 10000 Nifty in the brutal FII sell off we have had.
Let’s talk some stocks. Tata Motors came out and reported a free cash flow of £900 M for the quarter gone by. That’s over 9100 crores liquid cash in one quarter! Fast forward next year and the stock is available at less than 4x forward Market cap to Cashflow! That doesn’t even account for the nearly $10B worth EV company sitting inside its Indian PV unit. It sold over 50K EV last FY, up over 2.5x YoY! So that market cap won’t be static but quickly move northwards beginning next January once the Ford plant gets operational. A base case scenario is a double in two years for this stock, without assuming too much.
Reliance just looks so stunning with the premiumisation of consumption kicks in. India is buying every luxury the world has to offer like there’s no tomorrow. Similar expansion happened in China when in the early 2000s when the world suddenly wanted to sell in China. Every luxury brand- watches, cars, liquor, bags sold like hotcakes. We’re seeing a similar beginning and mind you, we’re still a $3.5T economy! Over the next ten years, as we go up to $10T, just imagine how many Porches and Range Rovers and MacBooks and Gold Labels we’ll buy!
This,my friends, is an unbelievable buying opportunity in the India story and which is once in a lifetime! Don’t be scared of the little hiccups! If the Nifty itself will go up to 50000 in ten years, how does it matter if you buy at 16K or 17k!
Bet big on India, it’s a no brainier!
Life is all about Compounding! 