Four years ago, on March 13, 2020, we witnessed the first circuit down on Indian markets since 2008. The COVID crisis as it came to be known had officially begun though on that day, it was more an oil shock which led to the capitulation. Yes Bank had failed a week prior and Saudis have started the oil price war which led to the price of Brent crude settling in the negative territory, albeit technically.
It was crazy time. You start your day at 4 AM with markets falling in Australia to 6.30M when SGX nifty fell in Singapore to 9:15 AM when you watched your markets fell 10% like a pack of cards without breaking a sweat. Stocks collapsed in unison and the mega caps like Reliance dropped 10-15% intraday for fun. The portfolio lost 40% in less than three weeks and it was crazy times! Nifty which was almost 11K in the last week of February 2020 went to 7500 intraday low on March 24!
Anyways, today is the fourth anniversary of the crazy day and markets have given a salute by falling across the board, with mid and small cap indices falling 5% each. The froth in PSU and select other smaller companies has cleared out a bit where some stocks have corrected almost 40%!
The erstwhile darlings such as Angel one are down 40% too and this is a sign that there is a strong churn going in the market when not everyone who has a demat account will make a million bucks in a month.
So what do I think now? Well, today’s fall was a brutal capitulation when the screen showed a near vertical collapse all day long, barring a minor recovery at midday. Is it the beginning of a bear market? No. Is the top in place? Absolutely no!
I’m a student of market history and market psychology and in my limited understanding, tops are not made when the SEBI chief warns of a bubble and the indices correct the next day like good obedient students. The tops are not made when everyone is worried if the bubble is being built and how valuations are frothy and why there should be a correction. Tops are and will be made when after two years of 40-50% index returns, at around 35-40k NIFTY the then SEBI chief or someone as prominent will defend the valuations and say that all’s well on Dalal street and in their opinion, the markets are likely to go higher.
This is nothing but a textbook bull market correction which will scare the hell out of you and many others who will miss the strong rebounds we are likely to see and then curse themselves for selling out at the bottom.
For me, the stocks which are not falling as much as their peers are going to lead the rebound and the next leg of this rally. BSE is the absolute king of the post covid run and it will be a one lakh crore company, a darling of all MF and PMS and FII portfolios in three five years and then be talked like Bajaj finance does today. Please remember, Bajaj finance was hardly 100₹ in 2014, 1000₹ in 2017 and corrected by over a third multiple times before hitting the absolute top of 8000₹!
Tata Motors is the HDFC Bank of this decade which has gone over 15x since COVID, the highest a large cap had and will see its weight in the index go from currently 1.7% to over 4% in two three years. This story is a secular decades run and the only thing which can derail this is if the electric cars stop selling in India.
The other joker of the pack is OFSS! It has been my fastest doubler and the way it’s holding up, it won’t be a surprise if it becomes the Nestle or Page of this decade! The thesis of strong growth, low float and great management is playing out very well!
It’s not on the days when everyone makes money that you give a bold call. It’s days like today which separates the man from the boys. I’m strongly bullish and if I have any money left, I’d go out and buy at a frenetic pace. When the screen bleeds, you buy stocks! This correction will be over sooner than you imagine and the rebound will be sharp. It won’t be long that the portfolios which are down 10-12% from recent highs, go up 30-40% in six months time!
PS- the Indian economy is growing like crazy. People are spending to buy better stuffs like anything. One of my friends told me about a 2023 Range Rover Velar which was sold to another buyer at no discount to the ex-showroom price after a year! In a normal world, it would have gone for at least 15% discount! The India story is real and kicking. Stay bullish, let the screen bleed red!
Life is all about Compounding! 