Weekend Musings- November 2024

Indian markets have finally made a semblance of a bottoming out formation with a massive short covering 500 points rally today. So what are we seeing

Over the past two months, with relentless FII selling, our markets have corrected just over 10%, technically entering the correction territory. What I’m seeing is that with a lot of froth being taken out and most large caps down close to 20% from their all time highs, markets are definitely a good place to be.
I certainly have remained an India Perma bull and in any case, in my humble opinion, we are in the middle of a multi year bull run and this is somewhere in the middle when we throw away the skeptics and move on to higher highs.
Psychologically, most people have been waiting for a correction and people don’t wait for such days in the middle of a bubble but in the skepticism phase. So going by the logic of market cycles, we are nowhere close to a top.
The FII selling, for whatever reason has made valuations a lot reasonable which means whatever the amount of cash our people had on the sides can now be deployed.
It has also proved the fact that in this bull market, most Individual investors have made a ton of money and every supposedly smart investor has not even come close. The dumb retailer has certainly been the best performers .

Further, it’s evident that our great experts have only been momentum chasers because they were very happy to buy whatever went up and then come on TV to intellectualise their purchases.
Now coming to what I feel is the undercurrent all about.
Just look at what’s happening to stocks which are within 5-10% of their ATH – Capital market plays which refuse to go down since the party has only begun. With low float and huge outperformance, these yesteryear’s small caps are now knocking on doors of the large cap indices and the funds have to buy them at higher prices, which Keeps the price afloat. What sustained fund buying from passive funds can do was best evident in case of FAANG and now Nvidia so this is just the beginning in many of our names like BSE type.

Also the last decade heroes are finally biting the dust one by one, with Asian paints being the newest of the lot. This only proves that their cycle was over at the peak of Covid and history always rhymes in market. This lot Will possibly give next to zero rerun in this decade and money, especially index money Will make an exit fast.

Anyone who wants to make money needs to remember that index investing doesn’t make any money unless you really stretch it out for five-seven years to average the volatility out. I’ve been extremely blessed to have owned BSE for six plus years now and it’s not even a question that it’ll at least be a triple from here in two-three years. Simply because the earnings Will compound massively. It did 345 crore PAT this year which is close to 1400 crore annualised! At current market cap, it’s just 45x almost trailing earnings growing at 25% Q-o-Q and 100% Y-o-Y. Even with all the regulations on F&O, just because of the sheer size of our market, it’ll do at least a Billion Dollars in Sales in three- four years . To give you a perspective, the Intercontinental Exchange which owns the NYSE does over 3.3Billion Dollars in a quarter. So the runway from here is massive. No doubt BSE Will be a $25 Billion company soon and maybe a $100Billion company in next ten fifteen years! The time to sell BSE is still 5 years away!

So to wrap things up, it’s an unbelievably good time to redeploy in the markets since every year we have this 10-15% drop when people say it’s getting all doomed but it never does. India continues to remain the fastest growing economy and we are getting incredibly rich as citizens. A lot of that money Will find it’s way in luxury spends and a part Will be financialised through stock market. That’s all the theme there is! Stay invested, stay bullish!

Disclaimer- The views expressed in this blog are personal opinions and are shared for educational and informational purposes only. They should not be considered as financial, investment, or legal advice. I write primarily to document my own learning and thinking process. I am not a SEBI-registered investment adviser, research analyst, or financial influencer, and no part of this blog should be seen as a recommendation to buy, sell, or hold any security. Please do your own research or consult a qualified professional before making any financial decisions.