Today marks the beginning of the next leg of the ongoing bull market, which began at the depths of the COVID crisis. The first leg took the market from 7500 Nifty to about 18K Nifty followed by a correction- price wise and time wise for almost two years. The breakout beyond 20000 on the back of real fundamental good news heralds a new era. The market has sensed continuity on every front- political, economic and thus is beginning to price it in.
It’s time to go long on the country! There are times when you are bullish on a sector or a theme or a particular story. This, however, is the time to go long on the India story. For some of us who have held through the bad and boring times of the last two years have already seen portfolios doubling in the last 8 months. This is the time which according to me the Index will outperform everything else.
There have been previous instances of strong index performances, especially in the past bull runs when the index itself have gone up 25-30-40% in a year. So I won’t be surprised if we see 25K Nifty before the results are out. That’s my base case scenario.
Also, as the index has been flat for two years, this should be the time when markets go up before the next run of consolidation and corrections as they eventually happen.
So what am I bullish on? I personally have always been a bit more than hundred percent invested so unless I sell a position, it’s difficult to crest anything afresh. Having said that, the FIIs are coming to paint the town green. They have been off the bus for a while and with the kind of indication the market gave us today, it is but natural to expect them in troves. The large caps- the HUL, Reliance, ITC are the ones which will be back in favour along with the current favourites. overall, unless Reliance moves 40% from here, the index can’t go up 25% since there’s a hesitation with large erstwhile FII favourites.
Here’s an ode to TaMo and BSE- these two stocks are now up 10x and 25x from COVID lows and still can be safely considered as cheap. I have been incredibly blessed to have owned them and continue to hold them for as long as I can imagine.
I however feel that it’s the breakaway point for something like a United Spirits and an HDFC AMC. Even my little position in Colgate has been a rank out-performer . I personally believe that large companies will be back in favour for they offer the float to absorb larger flows and also because a tectonic shift in favour of these themes have taken place.
So how bullish I am? 100%.
How worried I am to avoid junk at any cost? 200%.
If you go back and read my earliest blogs, I have maintained that in times of euphoria, junk flies the highest. So what I have been doing is to avoid anything which is over leveraged/ debt heavy or is not of the highest quality, even if I underperform a bit. Once you spend a few years in the markets, you realise that every couple of years during good times, punters look like geniuses. So I have been happy in underperforming during happy days because that allows me to hold my breath during the eventual down turn.
Anyways, we are just at the cusp of a mega run so no worries for the next few thousand points!
Stay Bullish on India- it pays, a lot!
Life is all about Compounding! 