ZerotoBillion

India’s Economy is Dead-ly!

This has been one of the most brutal months in the market in terms of sentiments. The amount of real negative newsflow has been massive- Trump raising tariffs on the Indian exports to unprecedented 50%, incessant FII selling and falling markets. Markets have corrected yet again and there is a lot of pessimism on the street.

The yearly SIP returns have turned negative and so have India’s Nifty and Sensex returns. Every positive news has been shrugged off and the negative one lapped up by the indices. Is the Indian story finally over and we should go home and stop expecting returns?

For someone like me, there is a clear sign of contrarian buying emergence. I was smelling a lot of over-valuation in the past few months and we did speak out of the lack of opportunities with everything fairly overpriced. This correction has at least taken care of that part of the story.

Now you have to understand something which is more real. Indian GDP grew at 7.8% in Q1 of the current financial year, beating the most optimistic expectation by a wide margin on the upside. We are experiencing stable low inflation after years of sticky high inflation environment. The government is also finally waking up to push the consumption story, first through personal income tax cuts and now the GST rationalization. Yes there are challenges to exports but please understand that India is largely a domestic consumption economy with total merchandise exports constituting less than 10% of the GDP.

If our $4 Trillion GDP starts to grow at 7%, it means we will add close to $300B in a year and this increase in wealth creation will finally nullify every negativity which currently clouds our judgement.

Most importantly, the Indian entrepreneurship culture coupled with equity craze is here to stay. People now understand that a dip is a buying opportunity and the stupid retail isn’t that stupid anymore. He also includes people who are either hiring professionals to manage on their behalf or putting in serious self-study hours to understand what it means to be an investor in the markets. The amount of money which is going to come in this market is only in its infancy and the final gush will surprise even the most optimistic amongst us.

The old adage that you bet on India in the face of all adversities stands true. The glass may only be half full but its going to finally be filled to the brim and more in years to come. I, as a student of the market truly believes this is the time to bet big on India and start buying what you truly think can have more value in the coming years.

One disadvantage of the equity markets is that everyone knows the price of its portfolio every minute. You may want to buy for the long term but a 10% crack in two days shake your conviction to the core. What was selling for 100 yesterday and looked cheap may sell for 80 tomorrow and still look expensive. Moreover, the pressure of trying to beat the markets can overwhelm anyone including the seasoned investors.

The key to investing wisely is to buy what you truly understand, something with strong tailwinds at its back and then hold on to whatever quantity you have if you can’t add. After this, remember that the first 10% on either side of the portfolio is market’s wish and can come or go in a day. Your portfolio can and will fall or rise 15-20% in a month and you must live by that. Unless you can stomach that much of volatility, you also don’t get to experience market beating returns of 30-40% a year which make you truly rich over time.

What we are doing is to hold what we own and buy what we can. Like everyone else, we also run out of money, doesn’t matter how much we try to keep as cash as like every greedy investor, we love accumulating our stocks when the prices are low. They of course fall further and we look like fools, but we are ready to face that situation. I truly believe that with the froth largely off in most loved sectors, especially the ones we have liked before, its time to be aggressive and buy, buy and buy.

What was the bottom in April may not be repeated but I think this is only a temporary blip in markets journey from 21800 bottom and a lot of stocks which are up 40-50% since then are only taking a breather. The cycles are short and volatility heightened. What you must do is to have deep conviction in the stories you like and own them through thick and thin because that’s how the returns are made in this market.

Stay Bullish on India, it works!

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.

Markets are Trump-ed!

It’s been a difficult period to be in the markets, especially in India. The mid and small cap rally has faltered and the headline indices refuses to go up. Some attribute it to Trump and his tantrums while some believe the earnings hasn’t kept pace. What are we thinking?

Firstly, I have had the fortune of incorporating my new venture, Caelis Ventures Pvt. Ltd. ( https://caelisventures.in )in an attempt to institutionalise my learnings and have a serious, formal attempt to go from zero to billion. Now that Caelis is in existence, the tone of this blog will move away from discussing individual stocks to themes which we prefer in the markets. It, ofcourse, now comes with a disclaimer that anything I write here isn’t a buy or sell advice as neither I nor my company is registered to provide any such advice. The purpose of this blog is to engage in meaningful market related discussions, only.

Firstly, it is a difficult place to be. The stocks which are relatively cheap aren’t growing and the ones which are growing aren’t cheap. You can still get an ONGC or other PSU stocks at sub-10 multiples but there is an overhang of some OFS or some policy intervention which might dampen the mood. The PSU oil marketing companies are a case in point. They have been selling their products at a constant rate for almost two years now which damages the shareholder interest as you can’t decide when the profit cycle will pick up, if at all.

Second, there is still a nostalgia about buying large caps as they’re termed as cheap compared to their historical averages. Well, how can someone justify a 0-2% growth for a nestle trading at 75 x trailing earnings? How is it justified for the likes of HUL or an Asian Paints etc. So just because the stock hasn’t moved an inch for three years doesn’t make it attractive. The problem is that people talk of ITC doubling from such levels in the past or an SBI going up 3x. Well, it took ITC 8 years to take out its previous highs and in absolute terms, the stock is hardly up 25% from its 2014-15 peak. Similarly, SBI did triple from Covid lows but it took it 12 years to take out its previous peak in 2007-8. Do you really want to hold something for the pedigree or are we trying to make some money?

Third, the headline index is now biased towards banks and erstwhile performers who haven’t delivered any returns for close to years and thus, if the index was more broad based and included other performers in mid-cap segments, this Nifty would have been something like 32000-35000 instead of languishing here at 24500 thereabouts. So we are at a situation where even though money keeps chasing large caps for supposed safety, the actual returns aren’t made in there nor do I see any meaningful upside in there. Ofcourse, if the buying resumes and we have a massive short covering, even the nifty can go up to 30000 in six months time, who knows!

Let’s discuss the capital market stocks, our all time favourites. There is a lot of buzz about SEBI barring weekly expiries, etc. Well, the amount of pessimism is growing multifold everyday. The exchange stock is down 25% from its peak which isn’t bad because it does take out a lot of froth which got built up in anticipation to bonus allotment. My take is simple. There are only two exchanges in India. If there is a market wide disruption, the more hit will be taken by the bigger exchange as it has close to 80% market share in F&O. So if the pie does shrink, there will be repercussions for both but please understand, the exchanges have existed since 1700s and will always remain such. People will eventually develop some other methods to trade as unless you ban equity trading in India, the exchanges will continue to mint money left and right. The reason why you get this exchange at 25-30% down in two months is because of news which to my mind I noise. When things get clear and the dust settles, do you still think the share price will remain same? Also, I was also getting a bit uneasy with 90-100 times PE multiple. It’s a good thing that it is now down to 70x trailing. If you simply do the math that its earnings will likely to go up 3-4 times in 5 years time, you are looking at a sub 15 times multiple going forward and even if the stock gets de-rated to 30-35x earnings, it should easily double in 4-5 years period which is not bad at all.

Also, we do underestimate the long term impact by share price movements. The amount of money which is going to come in the Indian markets over the next 5-10 years is significantly higher than anything we have seen before. So the only thing you should do is to hold your stocks and ride the volatility. Unless you go through regular 25-40% downturns, you will never see multi baggers in your portfolio. Some stocks are not to be sold and these capital market plays- exchanges, AMCs are exactly those.

Finally, are there significant opportunities? The clear answer is no. Unless you buy junk in the name of value or join the bandwagon in some power, Pharma, maufacturing theme, there is nothing to add right now. The IT sector is beginning to look attractive as there are only two possibilities- the AI juggernaut kills Indian IT sector and we lose whatever we own or the sector finds a way to stay relevant. The massive layoffs in the largest player is a signal of a significant churn happening therein. I as a natural contrarian is getting excited and am following it closely but there isn’t anything worthwhile to discuss.

So when there is nothing much to do, one must wait. As Charlie Munger has said and we put this up on our website too- The big money is not in buying or selling but in waiting.

Monday Musings

I would be lying if I said that we are in a deep value market with opportunities galore. With markets having moved significantly from the lower levels of March- April, 2025; people like me are finding it increasingly difficult to put incremental cash to work in the names I like.

What kind of stocks do I really like? I prefer extremely predictable easy to understand businesses where the bottom line is capital protection. I do not want something miraculous to happen in order to make a killing. I just am not wired that way. So, I do not find it easy to invest in companies with low dividend yields, ie below 2%; rather I like companies which are under owned and are hardly covered in the mainstream media; where institutional ownership is low to negligible or where due to some reason, the FIIs have sold irrationally.

There is another thing which I have begun to detest and that is the opium of diversification. I find it stupid to buy 20 companies in order to diversify and manage risk when you do not really understand what’s going on in at least 15 of them. Some people take the extreme step of buying 40-50 companies which is worse than buying an index fund.

Please understand that we are here to grow our capital significantly in order to grow rich and create wealth. We are not in this market to manage beta or diversify or do asset allocation etc as most of us have less than $1 M in capital. Most my friends are still below $250K capital ie they have less than Rs. 2 cr in the markets. When your capital is so low, all you should do is to allocate it in the best possible way to help it grow faster. Buffett became the legend he is because he was growing his capital of $500K at the rate of 40-60% a year before he hit the $10 M mark in late 1960s. He is on record saying if he can manage less than $50M, his investment returns will again be north of 35%.

So the myth we have been sold is that markets give 12-13% returns annually and this is what our expectations should be. Let me clarify- markets meaning large stocks like RIL, HDFC Bank etc give that much returns because they are already so large in their market capitalisation that it is difficult for them to grow faster than the gap growth on a sustainable basis. A company with 2 lakh crore market cap might find it difficult to grow at 50% because in the absolute number, the difference is 1 lakh crore. On the other hand, a 10000 crore company can go to a market cap of 20000 crore in a year because of its low revenue and profits base where even a small change on the upside can lead to multifold growth in profitability. This is the reason why so many stocks have gone up 20-50-100x since Covid lows on account of massive revenue growths on a very small base.

For people allocating less than $1M capital, liquidity is not a problem as we are only buying 500-1000 shares of a company and can get out even on a very bad day. Also, if we get two or three opportunities where the upside potential is large, its better to put in 50lakh than 5 lakh as our position will be very small compared to the market cap, even for a 1000 crore company and thus, we will get easy entry-exit opportunities. So even when we get cold-footed putting 10-20 lakh in a stock, remember that in the larger scheme of things, its peanuts and we shouldn’t be afraid of backing our best ideas with whatever we have.

If you like a good plot of land with 2 crore, you would even take a loan to buy it. You would not say, oh I will only put 20lakh in this plot and will buy 10 more such plots because I want to diversify.

So what I am now doing with my portfolio? Along with the standard disclaimer that whatever I write here is not a recommendation and I have a lot of vested interests in my positions so please do not buy or sell on this blog’s discussion.

Currently, I find the ideas of InVits extremely attractive. They are pseudo-cash positions as the yields are north of 10% which limits the downside and provide a lot of cash and since they’re much less volatile in bad markets, can act as a cushion in times of distress. Also, when the markets do turn rocky, we can easily redeploy that money. I have never held a cash position but am increasingly holding 15-20% cash in the form of Invits. They’re much better than traditional FD or liquid funds due to the underlying yields. The added magic is quarterly payouts so that you don’t have to wait the entire year for your dividends.

It won’t be a surprise if I go up to 40-50% cash in two years as the markets make new highs. Even though Im a perma-bull type of an investor, I do appreciate the logic of markets cycles. Every one to two year, we fall 2025%; every three-four years, its 35-40% and every 8-12 year period witnesses a deep crash. The beauty of these crashes is that the old winners fall the most and are never the new leaders. HDFC Bank, Bajaj Finance, Page etc all haven’t done anything significant since April 2020 while Dixon, BSE, Solar etc are up 50-100x. So once we go through that fall in 2027-2032, god knows when, the fall will be magnificent.

The only people who make money in such times are the ones sitting on cash before the crash. It is impossible to predict when the fall will be and in the meantime, the loss of returns on the upside at the culmination phase of a decadal bull run can be massive. Thus, the key is to have enough invested through all times while having significant capital to buy.

The only thing which will help you survive long years in the markets is recurring cash in the form of dividends. Once you have enough cash to stop worrying about making excessive returns or fall in markets, you can remain rational and deploy in times of extreme duress. It also allows you to hold on to your conviction ideas when the going gets tough or even when the returns are very high.

Zero To Million Turns 4!

This blog began as an idea to share my views about certain stocks and market positioning in general back in 2021. Over the past four years, a lot of what I have been writing about did turn out to be true and I am only eternally grateful to Lord Ganesha for his blessings as we are nothing without his desire!

A reminder and a full disclosure is warranted. I have at times discussed stocks and written what I would believe to be their fair price and value and of course I have been invested in most, if not all of them. So at any point if I comment on a stock, it must not be treated as a buy or sell recommendation as I am not a SEBI registered advisor but a private Investor managing his own funds.

So what has been the flavour of the season?

The Capital Market play has finally started. I have always felt that the capital market stocks- Exchanges, AMCs, Brokers, etc are a decadal play and they are most likely to outperform everything else in 2020s and the markets have finally woken up to their existence. All the AMC stocks have finally made new lifetime highs and they are finally catching up with their peers in the industry.

I strongly believe that when a sector is picked up and rerated positively on the upside, the stocks don’t go up 50-100%. They go up 5-8-10x in a year or two. Please go back and check prices of PSU banks from 2021-2024; defence and railway stocks in the same bracket and also the likes of Dixon and Kaynes in preceding five year period.

Thus anyone having a fear that AMC stocks are expensive at 40x trailing PE should check price of Kaynes which is still trading at 125+ PE after having corrected 40% from its highs or Zomato which is still at 100X + or even some Defence names. That the runway for growth is large in AMCs is an established fact. I totally agree with Ridham Desai when he says that the retail money is not going anywhere. We have had 26800 crores of SIP in May itself which is a cool run rate of over 325000 crores annually. The FIIs can sell what they want but the retail is pumping enough to keep buying in droves every single day.

Also, as the markets will rebound eventually, the AMCs will benefit from both higher AUMs due to mark to market gains and also higher inflows which will lead to higher revenue and profitability. Thus, at close to 20-30% PAT growth, the 40x PE will easily be 80-100x PE in three years and at double the PAT levels, they can easily be 4-6x in similar timeframe. Nestle, Page, Eicher are numerous examples of how such plays unfold in markets.

Most importantly, the people are yet to understand how big the numbers can look like. At an AUM of close to $850B, the ratio of cumulative AUM to GDP is just around 0.2. Even if India grows slower than expected, it will be a $8-10T economy in 10-15 years. At that point, with incremental household savings moving to stock markets, if the ratio grows to around 0.5-0.6, we are looking at cumulative MF industry AUM of close to $4-5 Trillion. At that rate, the larger players will go from managing $100B to managing $800B-$1 Trillion. At any rate, the amount of sales and profits will grow faster than the AUM because of operating leverage which kicks in beyond a certain size and it will not be a far-fetched idea if these stocks begin to trade at 5-10x of current prices.

Every sector which begins to catch market’s frenzy first rise 2-3x and then goes up 5-10x from there. Unless the Nifty 50 or Sensex 30 have these stocks, the rally can continue. These are not one month stories but decadal stores. We always under-appreciate how big 5 years out can look like but if we can force ourselves to think harder, it’s not too difficult an idea.

Further, with dropping interest rates, FD as an investing instrument is fading faster than anticipated. Thus, the current generation have no incentive to park excess funds as FD and assume it to be an investment idea.

And now we come to BSE!

The last we talked about it was in March when it had corrected to 4000 levels and I was giving my clarion call to buy at the top of my voice. What unfolded then has truly been divine. How else than a stock can go up almost 2.5x in three months! Everything which could go right did go right and market finally woke up to its reality and BSE hit a pre-bonus adjusted price of 9090! That’s a without bonus price of Rs. 27270! Let that sink in. My first few blogs four years ago mentioned it at around what was then a Rs. 600 stock. From there it has gone up almost 45x! What do I think about it now?

A. A lot of people have hated BSE for one simple reason. They missed it, period, So now they go on twitter and TV and diss about it as to how its a costly stock and how its a rigged stock and how it should go down by half and how NSE is the only king in the jungle, etc. A lot of them are doubly pissed because they have lost their shirts multiple times trying to short it. If you recall, twitter was abuzz with guaranteed price targets of upto Rs. 2200 in March 2025 when it had corrected from 6000 to 3670. Well, it did not hit 2200 but more than doubled from there to hit 9000!

B. A lot of media voices are clearly paid mouthpieces of NSE when they over-amplify everything which is bad and underplay everything which is good about BSE. My point is simple. There are two exchanges in India. NSE is a clear 80% leader in F&O and the amount of efforts it has put in to try and dislodge BSE’s growth in F&O is a testament to the fact that its getting hit where it hurts. It was the exchange which began the F&O market in India and introduced weekly expiries on almost all days of the week. So it’s kind of rich when it now cries foul about having too many expiries and why India should only have one expiry. Also, the zeal with which it wanted to have a Tuesday expiry made it evident that it has got not much idea as to how to counter BSE’s growing market share.

C. The panic of NSE shareholders is now getting real. They have now enlisted brokers to dump their unlisted NSE shares to retail in lots as low as 10 shares. It only demonstrates that they do not have faith in any IPO related pop of their shares and also have not so high hopes of an early IPO either. Everyone in this market is to make money. Nobody buys or sells out of their love for humanity. So if the retail public is being bombarded by their brokers with a get rich quick offer of buying unlisted NSE shares, it is only at behest of large holders who want to dump them as soon as possible. I never heard anyone sell their SpaceX shares to retail.

D. On the point of BSE being expensive. I agree that at 80-90x, it is indeed not cheap. Well, there are over 80 stocks with a PE greater than 75 as on today with a market capitalisation of more than 10K crore. I generally don’t hear much about Trent or Titan or Asian Paints or Dixon or Solar Industries or Hitachi about being too expensive. Titan has been a 90PE stock all its life. Even Shree Cement is at 95PE! So just because of high PE a stock should fall is a bad idea. As long as the market believes that BSE can compound at over 20-25%, this high PE can easily sustain and can even grow.

For those of you thinking Ive gone nuts, let me illustrate. Zomato has a PE of 120 and market cap of 245000 crores. PB Fintech has a PE of 250 at market cap of 88000 crore. Solar Industries has a PE of 193 with market cap of 1.93lakh crore. Last I checked, no fund manager came on TV from Singapore and called them rigged stocks!

E. And finally, a lot of stories do go around comparing NSE and BSE valuations and how NSE is a steal at current levels. NSE is being valued at close to 6 lakh crore in unlisted market which means its trading at close to 50 times earnings. It’s easy to understand that its losing incremental market share to BSE and when it eventually lists, if it manages to hold on to 50x PE, no shareholder will make the listing day pop.

So my limited point is that when something is a decadal story, it’s only realised in hindsight. If the Indian story is intact, BSE will do as much revenue as NSE does today in 5-6 years. It will be fair to imagine second largest stock exchange of India making $1 B in profits in 8-10 years. It did $150M last year. So even if it is then valued at 30x, it can be a $30 B stock which means it can more than double from here. It might not make as fast returns as it did in the preceding three years but if it can compound at 20-25%, and market values it at 50PE, it can be a $50B company.

I am holding on to it with clear understanding that it will definitely give multiple 40-60% corrections through the next 5- 7 year period but that’s the part of the journey, isn’t it!

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.

The Clarion Call to Buy 2.0

There are two views in the markets. One is that the markets have entered a long phase of a bear market with low recovery possible over the next few months and there is still some more pain left and the other is that the markets have gone through a lot of pain in the past six months and its time for the bull run to resume its upward leg.

I for one believe that we are still very much in the decadal bull run which started post Covid though Ramesh Damani likes to date this since September 2019- with the corporate tax cut and I am of course nowhere close to his wisdom. Anyways, I believe that our markets have had two serious downturns since Covid bottom- one beginning October 2021 when indices fell 20% from 18100 to 15800 and two year nifty return was zero. The second is the current phase when we had fallen a little less on the nifty but broader marker bloodbath has been massive.

With one year nifty returns already hovering around zero, it is very much probable that our nifty might take some months to retake the 26k top but it is more probable that our markets rebound and take off the losses which we have seen in the past six months quickly.

Ive to be clear on a few points- everyone is a buyer of BSE at 6000 predicting 8000 and a seller at 4000, predicting 3200 or I heard someone on TV at 2200. It’s okay in ether ways because a lot of people in markets are speculating. I am in the business of slow compounding with reasonable expectations of returns with associated volatility. For me, BSE at 6000 is a moment of joy and at 4000, a point of despondency but, I neither sold at 6000 nor am I selling at 4000. If a stock corrects 40% in 12 trading days, I get hurt on my notional portfolio valuation but beyond a point, it is immaterial. The fancy words like drawdowns, booking profits etc are only valid in hindsight.

When a stock makes fresh lifetime high at the peak of a bear market, everyone and their uncle was ultra bullish giving targets of 7000 plus. In three weeks, the targets are back to somewhere below 3000. What a credible source of investment wisdom!

This only indicates one thing- we went from extreme greed to extreme panic in three weeks! The same thing happened with Trent, Kaynes, Dixon and now even Zomato. Not that I am a buyer in any of them but people were lining up to buy Trent at 7500 and are looking at it with disdain at 5000! The same facts are being used to sell which were earlier used to justify ultra rich valuations.

It explains why most people who are in markets do not make real wealth. When you basically try to justify your opinion based on price movements, you are a speculator. And speculators make money on some days, lose on others and sit out on the next day and enter the next and so on and so forth. And, the charts! I have nothing against the charts because they do have some real value in terms of market positioning. The chartists, on the other hand are a dime a dozen. Every other person begins to talk of a rising candle in a bull market and eventually gets that candle home on his way down when the markets turn.

I am a student of market psychology. I was ultra bullish on markets and remain so but did feel a lot of scare when the drawdown happened. I generally am not affected by a 10-20% portfolio drop but a 35% drop is scary. On the other hand, as a student of market, on days when I am scared, I know the panic has peaked. When you want to further sell a stock which has already corrected 40% in two weeks which was happily a buy at 80 P/E 12 days ago since the earnings were going to compound massively, it signifies extreme fear.

And the trigger? NSE shifted its expiry day to Monday. I mean please give me a break! If a stock should drop 40% because of one action by a competitor, then if it also changes its expiry to Wednesday or to Thursday, will it go up 40% in three weeks? No, right! People need some reason to panic and a lot of selling happens due to other factors- someone wants to make up for a loss somewhere else, somebody had a margin call, some fund faced a redemption, etc.

My point is that in markets, these things happen. As you progress further in your investing career, prepare yourself for a lot of 20-30-40% drops every second year. This is what you have signed up for. If you want to make 50% in a year, be ready to lse 30% in a month also.

Here is what I am doing.

I have reiterated it consistently that you are here to generate wealth and not to beat an index. For individual investors, the absolute amount of capital which they make is all that matters.

You should buy only what you can understand and be very limited in your holdings. Unless you take a concentrated position, you don’t really make that much money is a lesson I have learnt in this market. Also, the money which you finally have after a bear market is your true net worth! Peak bull market valuations are only a good reference point in life. Masayoshi Son went from a net worth of close to $100 B to $2B in a matter of one year! Meta fell 50% almost overnight; Nvidea is down 30%, Netflix fell over 70% a few years back, Tesla is down 50% currently and falls 20-30% every now and then. Does that mean if you sold any of these, you would ever make that much money ever again in your lifetime? And these are the biggest companies in the world. And we in India do not have anything close to them yet.

Anyone who sells out their winners because it’s too high or falls 50-60% after a massive run actually loses a lot of money in a long run. Meta was available at $90 a few years back when nobody touched it and it recently went up to $700! You have had a seven bagger in the fifth largest company in the world in less than three years!

We have to understand that now our markets are so deeply liquid that when someone has to sell a large position, they can do that in less than an hour or a day at max. All of this took multiple weeks or even months a few years ago since our markets weren’t that liquid. Now you can sell 10000cr worth of shares on the market in a single trade. So whenever the fall happens, it will be brutal and you won’t have a chance to blink. Like IndusInd bank recently.

This my friends is a sign of strength. Our markets are now as good as the best in the world in terms of liquidity and trade technology. So whenever such fall occurs, look at them through the prism of opportunity.

I might have felt deeply scared but eventually I did what I do on these days- add to what I already own and let the markets do their thing. BSE for me is a hold till at least it does Rs. 5000 crore in revenue and close to 2000-2500 crore in PAT. After that, I will see what the situation is like.

Here is what I am seeing-

I can’t believe that the Indian AMC stocks are trading at these levels and they are to me a screaming buy. They are currently in the neglected zone and generally that’s where the maximum juice is. Anyone who thought that the Indian retailer will give up on mutual funds must have been shocked to see almost 26000 crore SIP figure for February 2025. This is an irreversible unidirectional move which will define the decade we are living in ten years from now. Our MF industry AUM is now close to $700 Billion. US MF industry AUM is close to $34 Trillion, which is 1.6x of their GDP. Out number is one sixth of our GDP. In the next few years, even if it moves to 0.5x our GDP, the number will be closer to $2.5-3 Trillion since the GDP is also rising. At that rate, even conservatively, the revenue of our mutual funds companies will be close to $25-50Billion with PAT ranging from close to $10-20Billion dollars. At that rate, the industry should then be valued at something like 350-400 Billion. Right now, the entire industry is valued at less than $65-70 Billion. It means that the stocks should go up somewhere between 5-10x without doing much.

Add to that a lot of rising dividend yield since these companies are cash generating machines. This is my clarion call to buy 2.0!

Wires that did catch Fire

A horrid day at the Dalal Street; every wire and cable company caught fire and left none of us any safer. The BSE rally from 5000 to 6000 is now over and its back to 5100 in a hurry. The feeling of fear and misery is pervasive and when even looking at your portfolio takes courage, you know that the shoulders are down and moral lost.

This is humbling for all bulls including me who have claimed that the best time to buy is now and it may even be. The problem is that when every rally fails and the shares which shouldn’t have fallen 10% have fallen 40 and more, it hurts. The name of the game is patience and everyone is left licking their wounds.

I have had a feeling since the last couple of weeks that the market is ripe for a turnaround but that view has failed to find any favour with the market. This has taught me an invaluable lesson- timing in market is next to impossible and trading is injurious to health, especially on a well formed logical view because when the markets wish to punish you, all the logics fail and the technical and fundamental indicators are out of the park.

The point of solace is that I have never traded or wish to trade so the only thing which is down is my moral and that too because my view of a reversal hasn’t panned out. Well, there is nothing called a hope trade in the markets, isn’t it.

So what we are seeing here:

If my reading of stock market history is correct and with the overall belief that we are still in a structural, decadal bull run whose crazy end game is yet to play out on the upside, we are somewhere at the absolute panicky bottom where every bull is down and out, licking its wounds. Everyone, including myself has tried to buy on the way down, buy the dip as they say and have seen the prices fall another 10%. We are left wondering as to what the hell is wrong with us that we should have waited for some more days. And when the bulls are so badly beaten that they stop to add any fresh positions on the upside, voila, who’s left to be sold to.

So looking at my own psyche, when I was petrified throughout this week and especially today to even look at the screen; I guess we are very close to the point of absolute capitulation. Well, the thing is Ive said the same thing for the past one month and all of you will accuse me of being a broken record but in my humble opinion, the fall cannot sustain anymore. It may still fall another 5% on index, 10-15% in stocks but the more it goes down, the more ferocious the rally on the way up will be.

We might never see some of these prices again and one to two years later, those of us who are looking foolish to ask all of you to buy whatever and whoever you can, will be richer beyond belief.

There are of course strong sector rotation in play. Every wire company was on fire today, thanks to Ultratech’s announcement of getting into this business. This is on lines of the paints business wherein Birla and JSW have screwed up the margins of Asian and Berger paints. It was bound to happen, one way or the other and it happened today.

My take is that for individual investors, all one should do is to buy companies which have reasonable valuations and comfortable balance sheets and let the markets do the rest. I have never been a believer of catching the fads so have not had any exposure to Polecab or Deepak Nitrite or Pharmaceuticals or cement or the tomato or the likes. Yes, it is still possible to make a lot of money without having any exposure to the latest market fad.

There is a fund manager, Chuck Akre who runs his fund on similar lines wherein his top holdings include Mastercard, KKR, Moody’s & Visa. He runs a very concentrated fund of financial firms, something which Ive done organically on my own. By the way, ICRA is the Indian subsidiary of Moody’s and is a new holding for me.

An individual investor can own less than 10 companies, with good dividend yield and still make a hell lot of money, especially if the fund size is less than $10 M or close to Rs. 100 crores in India. The key to investing is to be very sure of what works for you and what you are comfortable owning for the next three years, with a lot of inactivity along the way.

Like for example, I have a friend who buys Pharma a lot and I on the other hand, hasn’t owned any Pharma since exiting a very small position in Sun & Lupin in 2018-19. So even if I get that very cheap, I might still like a mutual fund company better.

What works best for me is a company with zero debt; great profit margins; very neat and clean dividend policy- you do a EPS of 100, give me a dividend of at least 70 and even better, raise that every year; and of course something which is aligned with the idea of a richer India. What I think is that in today’s India, every Billionaire or a startup founder wants to own a piece of India’s retail/ capital markets. So all the companies want to open a mutual fund house or want to bring groceries to you in 10 minutes. I don’t think that the consumption theme has one or two players I can bet with the comforts of hefty dividends so what is left is the financialisation theme.

What I am trying to say is that if you can simplify your process and become part owners to businesses which will grow over time, you might be very wealthy in the process. Instead of trying to trade in and out and owning and not owning metal or Pharma or oil or quick commerce will not take you very far. Trying to catch every swing on the up and being able to get out in the nick of time is impossible.

Regarding the fall in portfolio, well that’s the nature of the beast. If you can’t stomach a 20% drop from the top, every year or two, you don’t deserve to make 3x in three years either.

Remember, the most money is made by people to bought and held and did not so much for a long time. Everybody else was lost in the noise. This view of selling small caps and buying large caps or gold or this and that is for someone who has a family office and is trying to protect his wealth. For us who are trying to first get rich, the only place is equity and that too in owning pieces of great businesses which you were lucky to identify and simply held for five-seven years.

Every stock market downturn is marred with pessimism and sadness. Everyone who is now asking you to run out of the market is going to say this was the best time to buy. Don’t forget, people who now say Covid was fantastic time to buy were petitioning to shut down the Stock Markets! Nobody, not even a single person I remember advised to buy in March or April of 2020. So all these experts are nothing but salespersons, who are only trying to sell you their PMS products. Read a lot of stock market history which will keep you in good staid in times like these. Bottom, I believe has been made but I can very well be humbled badly tomorrow!

The Time to Buy is Here and Now

The past six months have been pretty tough for the Indian markets. Everything which was going right, did go wrong and some more. It’s one of those times when everything which you believe to be true, turn out to be false. India, which was going uphill as the worlds’ fastest economy took a pause, the Industrial growth slowed; inflation went up and corporate earnings dropped. Indian market which looked cheap at 26200 are suddenly too expensive at 22800, size months later.

So what are we seeing here.

First of all, some myth busting times. A lot of the gurus on TV and X are incessantly telling us that we retailers who came during or after Covid haven’t seen any fall and thus, are inherently prone to a downside risk. Well, people have short memories in the markets. The Nifty which peaked out at 18000 in October 2021 gave absolute Zero return for two years, until it took that point out again in September 2023. It fell all the way to 15800 and all the post Russia-Ukraine, Nasdaq meltdown, Crypto frauds, etc happened during that year. Well, that’s just 17 months ago.

Second, people are crying over the fact that the equity will give negative returns and how the SIPs will turn out to be a dud, etc. In summary, Indian markets are up just around 90% in 5 years, which is from just before Covid to now. So, it’s not that we have had some 40% CAGR for five years and the markets have gone to bubble territories, etc.

Thirdly, a lot of this S Naren kind guys have been crying about valuations being too high for more than two years. The wolf will eventually come one day and then they claim to have prophesied the fall. It’s kind of nonsensical to keep predicting every year that the markets will fall and of course, in one or the other year, they do fall. This is nothing but rabble-rousing to popularise your asset allocation mutual fund product.

Let me put this straight. A retailer is here to first make some money. He does not even have assets to put in an asset allocation fund. This all financial planning nonsense which is being served by influencers and mutual fund touts telling us to buy gold and real estate and FD and equity and how to allocate x% to Large caps, Y % to mid caps is pure bullshit. You are telling this to a guy in his 30s who is only trying to put 10-20k in markets to buy gold? I mean, will he buy 2gm gold with that? And will he buy handle of a door of a flat with 20k? How do we even allow such gobbledegook in the name of investor awareness.

Asset allocation is right but only for someone who has at least a million dollars to allocate. For everybody else trying to make some money of their hard earned savings, the only thing which works is equity. It has the highest liquidity, maximum transparency, lowest cost and taxation and above average returns. You don’t trust me? Try buying a plot of land or a bar of Silver and show me the contract note you received on your email. Oh you didn’t receive it. Yes, that’s the point.

So the first thing you must do is to remember that we are in the biggest wealth creation two-decade period this country is going to witness in the next 50 years. We will go from 3 to at least 12 Trillion Dollars, even at the slowest possible growth rates and the absolute amount of money that will be made will be stupendous. So the only thing you’ve to do is to remain in appreciating assets- Equity, Either through buying good quality stocks directly or through equity only mutual funds. No bonds, no asset allocation nonsense until you’re above a Million Dollars.

One more thing which Im sure the folks are wrong are regarding the small and mid-cap universe. They’re such hated these days that nobody wants to even touch them by a one meter pole. And friends, the first rule of investing is to buy what’s hated. And buy when there’s blood on the street and right now, there’s a huge spillover around.

I generally avoid predictions because it’s a fool’s errand but Id assume that the excessive selling has taken every last ounce of froth out of anything and everything. Any stock which could have fallen has fallen; anything which was expensive is not anymore; anybody wanted to dump $10B in a stock has done that. So the only thing left is for the markets is to go up.

Id take you to one more myth. When the markets hit 13K in January 2022; it fell around 10% so sharp that the bets were off. We forget such moves because we are being told they never happened. And then the rally to 18K happened in six months period. Please remember, the markets will fall 15-20% every year or two and these people who ask you to buy at 26k will beg of you to sell at 22k. They’re in the game of stock entertainment and commissions, you are here to make wealth and change your life.

Don’t even think of getting off the boat; it might have already sailed ahead!

A Clarion Buy Call

What a week it was! Everything just went down and out and then some more. Mid and small cap index lost close to 10% in a week isn’t a joke. Everybody who manages public money is running over each other to come on TV and say that they were the ones who spotted froth in the mid and small caps and that they were smart enough to allocate to only large caps.

There is a line to claim who went to cash the earliest and how they’re the smartest fund manager and anyone who was still invested is a novice; someone who hasn’t seen a market cycle and how only someone who is touting asset allocation and has been here for 30 years is the true guru and so on and so forth.

The amount of pessimism is unbelievable. Ive been in the market for close to 7 plus years and except Covid, I don’t recollect any time when the pessimism was so stark. The difference is that there isn’t an obvious reason to attribute for the fall and the relentless selling by FII and now even by HNIs is strangely without a visible backing. In 2022, it was Russia-Ukraine, or the rise in yields in the US; in 2018, it was the LTCG or the loss of some election by the BJP. Here, there is none.

Everybody is unanimous in believing that the market can and will go down but everyone is still looking for a way to intellectualise this opinion. I mean, if India was expensive, then it is less expensive now; if our growth was slowing down, RBI has infused a lot of liquidity and cut rates and also the CPI number was lower than expectations; if the earnings were terrible for September quarter, they are less bad in December and so on and so forth.

So the point is that there is no one reason on which everyone can unanimously agree to blame for the crackdown in portfolios.

What am I seeing here!

I was and until am a believer in psychology of the markets. I claim no special insights into prediction the tops or the bottoms but I believe in cycles of the markets. I also am a strong believer in the inherent growth of India and still believe that the bull run which started during the depths of Covid in March 2020 has a lot of legs to run. That market saw us go from 7500 to 18000 Nifty in October 2021 to a drop of close to 15% to around 15k and from there to 26k nifty in September 2024 to now around 23k nifty. A mere 3x in 5 years isn’t a mega bull run, especially if you take it on a five year just before Covid low basis, index has only gone from 12k in February 2020 to only a double now.

I was getting a lot nervous in late December when my stocks were going up pretty rapidly and was wondering whether a top was being made. The top, however, is not even close.

Friends, tops are made when everyone is bullish and has made a lot of money; when you are not thinking of nifty going to 20k but betting your house on it going to 50k; when the worst stock of your portfolio is up 20% in a week and you’ve made 5-10x on stocks you don’t know much about. Its counterintuitive but the top is made when there is no seller left in the market and everyone simply want to buy. That’s when the final hurrah is made and the stocks can’t go up anymore.

Similarly, the bottom is made when there is no buyer and everyone only wants to sell and run away.

This is what I am seeing right now. We have gone down sufficiently for any or all froth to vanish and one thing which all of us can agree is that there is no pockets in the market where there is any kind of froth is left- F&O trading frenzy has died; PSU- defence and railways are mostly down 35-65%; so are EMS, PLI type or even capital market stocks. TaMo is down 45% and RIL, HDFC Bank and Nestle have given zero returns for 3 years. So what else do you want now!

As the next week unfolds, we might see further downside or markets can go up, who knows. What I know for certain is that when there is blood on the street, you go out and buy and baby there’s an absolute carnage on the street. Everyone is certain that all rallies will be sold into and whenever there is a bounce, the markets will fall down to even lower levels and all starts on the upside are false. Only until when they aren’t and then the rally which will start will be so ferocious that people won’t even believe that their portfolios have doubled in no time. I was extremely scared till today first half but the way the bloodbath continued, it made me remember the days of April 2020 when I went all in while the smart people still predicted nifty at 6000 in June 2020. Well, it never happened.

I don’t know if the markets will stop going down. All I know is that if it does, you’ve to turn even more bullish and if market falls another 10%, start putting every penny you have in stocks. This is a clarion call to buy, buy and buy. Your friends and neighbours are now running around to buy gold; it’s time to buy stocks like there’s no tomorrow.

The next phase of this bull market will take us to places we can’t even imagine. The amount of wealth which will be made will make the believers rich beyond belief and I am sure we will look back at February 2025 as the time to buy when we got scared and sold out.

The Point of Capitulation

I was writing this in my journal yesterday that the point of capitulation was either yesterday or very near. And I believe we have just hit that point in morning trades of today. Market sold off massively from the word go and all bottoms fell off in the small and mid cap before a sharp recovery pulled certain stocks way back in green in the second half.

What I mean by the title is that when markets fall significantly and relentlessly; when no logical explanations to describe the carnage sounds reasonable; when all buying the dips fail and the entire world is shit scared to take the name of the word Stocks/Equity; that is the exact point when major bottoms are made.

So imagine this scenario- S Naren of the ICICI MF went around the town dissing the SIPs in not just Small and Mid caps but in equity itself; fear was being spread that the SIP Sahi nahi hai and you’re going to lose all your money in SIP to a public which has just put in 26000 crore plus in January 2025 through SIPs! Imagine the BCCI stopping kids from playing cricket.

Ive had a thumb-rule to predict the market. When the Hindi newspaper Dainik Bhaskar puts the fall in Sensex on its front page, it’s the bottom or we are almost there. What I mean by this is when a general newspaper not interested in stock markets to sell itself wants to tell its readers who are not the regular consumer of financial news that there is panic in the markets, the panic has basically hit the roof.

So that aside; here is my views on the markets:

India is undergoing a massive shift from being an also ran economy to a major first world type economy with extreme pockets of wealth driving the opulent and luxury consumption through the roof while the aspiring middle class will try to a- imitate the rich by buying better goods and services and also thanks to the structural shift in savings behaviour, will put a larger portion of their disposable savings into market linked products- MF, Direct Stocks, Insurance, etc.

Ive also learnt a few things in my journey of now seven plus years of investing that an individual investor is inherently advantaged against a fund manager trying to beat an index due to sheer compliance issues and as well as compulsion to mirror/beat an artificial index. So an individual investor can very well buy one or two good stocks and compound at superlative rates and beat the pants off anyone else in the markets.

Also, and this is entirely my opinion that you have to have larger stakes in what you own. You can hardly follow 10 companies in detail and are best suited to hold less than 10 stocks at a time with good concentration in each one of them to allow yourself to move higher up the value chain, as the stocks do well. It makes no sense to have 20 shares of a stock which went up 20x.

So Ive been pretty heavy in concentrating my portfolio as you’ve read all this while and Im also trying to examine what my style actually is. So for me, the most important thing is to buy and hold really profitable businesses with simple operations, zero to near zero debt, high dividend payouts and good margins. This sound pretty easy, isn’t it.

Now look around and count the fanciest stocks which have ruled the roost in the last two years- Dixon, Kaynes, Zomato, Waree, RAdico Khaitan, Ethos, ManKind, PB Fintech, etc. Add to this the railway and defence PSU and some metal stocks. I owned none of them. Not a single share.

And how have I performed? Well, my portfolio was up 100% in CY 2024 and 120% in CY 2023; zero % in 2022 and close to 100% in CY 2021. How’s that for a simple idea.

The logic is simple. One stock can and will change your life. For me, it was BSE. Now some of you will argue what’s so great about owning a stock which went up 30x since Covid bottom? The patience to hold and not selling your winners when it fell over 60% during Covid, 60% again in 2022 and over 35% in 2024 isn’t that simple, is it? That’s the boring job of looking at the stock through the eyes of an owner and feeling that you partly own a business that’s doing well and stock price will eventually recover as long as the business does well.

Now a lot of my friends ask me what exactly a full time investor does when you only trade once every few weeks, if not less than once a month? The simple answer is that to allow your businesses to grow requires patience and the time at hand is utilised to simply learn through reading.

So right now, as the blood on the street is pretty warm, here is what I am trying to do over the next few years, hopefully:

I would love to own any business which fulfils the above criterion of either catering to India’s luxury consumption or financialisation theme. I would, however, not own them unless the price is at a range wherein I can at least hope for a 2-3x in 3 years or less. Anything which has run up a lot or is too pricey is a big no. Plus, anything which doesn’t payout good dividends is a no. The idea is simple- if Im putting my funds in a stock for two-three years and I generally don’t book profits, dividends is a way to generate some real cashflow. Also, it’s the only way to examine the truthfulness of a company’s financials. If the EPS is real, dividends will flow.

So currently, among all the financials, I am most bullish on the AMC stocks. They have got zero returns for the past 5+ years while their PAT have gone up close to 2-2.5x. This means the P/E has contracted substantially and is in a zone where earnings are going up 25-30% Yo-Y with rising dividends ( NAM and HDFC AMC trade at 2.5-4% yield currently), even the slightest re-rating will result in the stocks going up 2-3x in a short span of time.

Will this mean that I will miss a lot of Dixons, Bajaj Finance, Page or other multi-baggers? YES! Totally. The key, however, is to think like a businessman. If only one of your stock does well, you will be a very wealthy person in 10-15 years. So why try to buy 50 stocks and act like a fund manager. Remember, you are here to generate wealth, not to beat an index!

Life of a Concentrated Investor

My investing journey began over seven years ago with some stocks picked by my father for me and what a journey it has been. From zero to here over seven years, it’s been a phenomenal run. Ive had my fair share of ups and downs but over time I have become what in investing parleys is known as a concentrated investor.

I own only seven stocks- eight if you believe Jio Finance and RIL are two separate companies and the top stock is well over 70% of my portfolio. Well, if you ask any investing expert, he will say my portfolio is extremely risky and Ive absolutely no idea what I am doing and I should sell part of it and rebalance it and make it more diversified to reduce risk. I have a different opinion to that.

When you see it from the point of view of a professional fund manager, a typical fund scheme has 50-60 and even more stocks with weightage mirroring or at least hugging the benchmark index. If lets say a fund has Nifty 50 as benchmark, it will generally have more or less all the stocks of nifty 50, give or take a few here and there. How it tries to beat the market, ie, to do better than the benchmark is by going overweight in a few stocks and underweight in others. So it Reliance has 9% weight in index, if it owns 5% Reliance, its called being underweight and vice versa in case it owns 12% Reliance. And then it comes on TV and justify oh we are overweight financials and underweight IT because the rate cycle is moving south or because Donald Trump has won the election and so on and so forth. They measure their performance by beating the benchmark. So if Nifty 50 is up 15% in a year and they are up 16%, they will celebrate and be feted as the man who has beaten the market and so on.

On the other hand, I as an individual investor is not in the game of beating an index or market for that matter. I am here to make money and to sustainably generate wealth for myself.And serious wealth is not made by owning everything the market has to offer today morning. It’s made by staying invested for long periods of time in businesses which compound their earnings and hence their share prices 10-5-100-1000 times.

So when I was beginning to get serious, I had 15-20 stocks with some stocks doing good and some doing worse. It was only in 2020, post covid when TaMo and BSE really took off. So in the process of natural selection, I was smart enough to not sell my winners and what eventually happened, as you can read my blogs beginning May 2021, I began a process of elimination. I sold my PSU stocks after making 2-3x my money and bought more and more BSE and TaMo and the like. I understood the power of quality, low debt, good yield and then I understood the concept of decadal themes and 100 bagger stocks. This is when I narrowed my theme to two simple iterations- growing consumption in India and financialisation of savings. And financialisation of savings would be led by non-lending stocks was my biggest learning.

That I was extremely bullish on BSE is an understatement. I also grew as an investor and began to average up and have bought BSE and others at all prices. My most recent purchase would be at 4500 BSE and 4700 AMC. So in the end, the results have been pretty staggering.

My portfolio is up 90% this year. Almost up 400% since bottom of March 2023 and is up 50% since Budget 2023. I also have seen drawdowns of over 5% a day, regularly since the largest stock is so heavily influencing that the entire portfolio is skewed.

So what am I trying to say here. I am making you see that I am having almost a VC like mentality when the biggest winners are funded in every round at higher valuations with almost unlimited runway and distant exits. There’s a reason why sequoia has been what it has been. It had such brilliant 10000 baggers that its returns are better than any other person.

So when you are running such a concentrated portfolio that your entire networth is directly proportional to one or two companies, then your behaviour and psychology goes through a paradigm shift. You start to think in terms of where the business will be in three-five years and not how the stock price has moved up or down because of what SEBI has done or what election results tell you. It is so much easier said than done. Your heart pumps and you begin to sweat looking at 10% drawdowns in two days because just 5 such occasions and you’ll be left with less than half of where you were just a few days ago. You begin to doubt yourself when out of nowhere the price tanks and you are being told by some technical analyst that it was overbought and fell from a resistance.

So the journey to make multi bagger returns only look good from the outside. Since you are so lonely in your belief that when the things go south, the world tells you that you were just lucky earlier and the time to pay for your sins are here. The wealth destruction is at times so brutal and so furious that you simply can’t react.

The returns are exceptional on the upside though. I have been blessed to have beaten every possible index over the past one, three or five year period. The vision for some of my stocks remain the same and I am sure that what I am trying to achieve in my life is a moonshot- zero-to-billion and it can’t be done by playing small.

My life as an individual investor is going to be very, very different than any of you because I am trying to be big enough to buy percentages in companies I own. Just like RJ bought 5% of Crisil or 5% of Titan and made his Billions. Every successful investor has made 95% of his wealth by owning huge quantities of less than 3 companies; everything else has been sidekicks