Author Archives: ZerotoBillion

Let’s be honest, the current market is brutal. The past six odd months have seen the major indices regaining some of their lost glory but the portfolios are either down 10-20% or have done nothing in this period. Market moves up for two days and you take a sigh of relief that oh, the worst is over but it falls down equally and sometimes more over the next few days and the cycle repeats, endlessly. The brutality isn’t in the fall but the constant loss of notional gains, all over again. 

This is typical of sideways markets. We witnessed a good bear market in the first quarter of the year when everything was down 30-40% and the indices also fell close to 15-20% but it also recovered large parts of the fall by June. Now when every bad news has been either relegated to the history books or has been tackled successful and a plethora of good news has flown in, it is only logical to expect a sharp meaningful recovery on the upside. GST cut, RBI rate cuts, GDP growth, everything has failed to take portfolios to fresh highs.

So now what are we seeing here? 

It’s often said that the stock market requires patience to make money. Well, this is exactly what’s wearing thin here and I am no exception. You have analysed stocks in detail, you make entry and keep adding on dips and even on the way up; the numbers are great every quarter, the businesses are growing but the price is down 25% and doesn’t move. On a monthly basis, the portfolio doesn’t do anything but goes down 2-3% and bleeds you to a slow death and doesn’t matter what you do- buy more on dips, hold on the way up or sell at modest gains or book loss, everything turns out to be wrong. So, as we end this year and prepare for a fresh start, let’s try to analyse what the market looks like to us:

 

1.          Metals– There has been a tremendous rally of late in all sorts of metals, led by Gold and Silver and thus you see the likes of Vedanta, Hind Zinc, NALCO etc making fresh highs every day. We have clearly not participated in this run for a couple of reasons. One, the idea of being able to buy them when they are beginning to go up and ride all the way is beyond our capabilities. We see no ability to forecast global demands of metals, precious or otherwise because we realise the complexity of the supply-chain. A lot of people who come on TV and talk these stocks up are doing nothing but chasing momentum, backing the up with the recent article in Financial Times authored by an analyst with one year of work experience. What I mean by this is that nobody really has a full understanding of the entire chain- geopolitics included. And those who do are also forming their opinions based on what they are reading in newspapers and will find it hard to locate Israel or Kuwait on a map. So, we accept our ignorance and do not swing for arrogance.

The second reason we do not own metals is because we believe that when the cycles turn and they eventually do, the correction is not severe but devastating. A few years ago, NALCO was available for 20 Rs, having corrected from its 2009 peak of about 230! So, it took NALCO 16 years to take out its earlier peak. This time, the peak may be even higher but I assume, based on history that once it runs out of steam, we will see it trade below sub 50 levels and that’s exactly the time to own it in bulk. If you are reading this blog for the first time, try to read my 2021 blogs when I was selling NALCO at around 90-100Rs, having bought a lot of it during Covid. Regarding Vedanta and Hind Zinc, I have my opinions on the way the promoter runs the business, bleeding the company of every penny of cash and borrowing at such insane levels in international markets that I fear for the company’s solvency. Be careful when the company’s earnings are in INR and its borrowings are in USD/ GBP as when the music stops, you are not even caught naked, you are found dead.

2.         The New Age companies– As a consumer, I am all in for the quick commerce delivery companies but the speed at which they are bleeding cash is scary. Today’s newspaper reported that Swiggy has burnt all the cash it raised through its IPO last November and is now trying to raise 10000 crores through QIP. I was flabbergasted to see a stock going up, I think it was Zomato or Swiggy when it raised some mammoth QIP. Let me illustrate it for you. If a company raises money through issuance of more shares, which is what a QIP is, the total number of shares increases. If it earlier had 1000 shares and now it has 1100 shares, the total market cap remains the same, your shares are now worth 1000/1100 of what they were before the fund raise. This is called equity dilution. And if a company is diluting equity repeatedly, it’s killing its shareholders by diluting the value of their shares and by increasing the supply of shares outstanding which normally leads to a downward spiral in prices. So, when a lot of people get excited that oh Yes Bank will be 200 Rs again, I quietly point out to the massive dilution which has happened in the past 5 years through issuance of shares to raise cash.

       Now a bank raising a QIP at least is making some profits to show. These new age ones are burning everything they have raised to chase growth and are very soon left with little cash on the books and will come back again to markets with an even bigger QIP. See what happened to Ola when the promoter sold 3-4% of the company at 80% below the lifetime highs! 

Regarding talks of these companies turning profitable, I have only facts to offer. Zomato is making some 50-100 cr PAT a quarter, that too after some funny accounting on ESOP. Assuming it to be true as it is, it’s trading at 1000x PE! Even if it makes a 1000 crore PAT in five years and is trading at 100x PE, the stock price should be 100Rs, down 66% from current 300 odd. And this my friends is a very benign scenario. And it’s only one Zomato. There are multiple such companies listed currently. 

Recently, Ramdeo Aggarwal is hyping lens kart massively. That man, on record has hyped Zomato on listing, abused it when it fell to 40Rs and again hyped it when it went up to 300. Not everybody who cite Warren Buffett are its true disciples! Make your own decisions when you invest as the share prices can go anywhere but once you taste blood in such companies, you can never think straight.

3.         Capital Market Companies– We own them happily and for one simple reason. Any structural growth sector does not fade out in 2-3 years. When IT sector opened up, it created multiple companies doing annual sales of multiple of Billions of Dollars. At this point, the largest listed Capital market company is ICICI AMC with annual sales of 4900 crore. HDFC AMC is at around 3900 cr while BSE is at 3700 cr annual revenue. Let’s put this in perspective. The annual sale of HDFC AMC is at around 500th rank of all Indian listed companies by sale while BSE would be at around 550.  There are at least 220 listed companies with sales between 5000 & 12000 cr annually and none of them include a single capital market player. The largest unlisted such company NSE does 18000 crores annually, which is less than at least 155 companies in India.

So, what I am trying to convey is the immense runway available for these companies before they are even close to a normal 10-15% sales growth phase. Even if they do 4x their annual sales, they would still be below 200 companies in India then! Also, when a sector come of age, the leader generally finds it included in NIFTY and Sensex. See, Zomato, HAL, etc. At current market cap, these companies are yet to be classified fully as large caps and need to at least double before they knock on the doors of top indices.  Also, as the decadal leaders, I am confident of at least one mind boggling rally left in these stocks which will possibly culminate around the time NSE gets listed and gets included in Sensex, which to my mind will take around 18 months odd. Timing may vary but the outcome may still be what we are hopeful for. Fingers crossed!

 

4.         INVITS– With the new SEBI guidelines, government push to make INVITS affordable, invits are a very good investments to make as a cash-plus instrument. There are a few publicly listed and many privately listed INVITS. The privately listed ones like Energy Infra, etc have huge yields up to 17-19% and a lot of my friends wanted my comments on them. So, a privately listed INVIT is traceable on a stock exchange but has a minimum ticket size of 25000 units. So, you can’t buy 10/100 or even 10000 units. Further, the liquidity is extremely low. Thus, neither can you get in nor get out when you want and thanks to the low liquidity, if there is a panic, the 100rs unit can trade at 80rs in three trades. On the other hand, the publicly listed INVITS offer extremely good liquidity plus very good yields (10-12%) which will most likely go down as more interest emerge from larger public. Recently, in PGINVIT, a foreign investor sold 10% of the total shares in one bloc and the stock hardly fell 3% at the day’s end. Imagine this with Akzo Nobel block deal when similar size deal led to a 20% price cut for the stock. Thus, liquidity is not a problem for a normal guy trying to buy 5-10l worth of shares. Also, I believe that as invits become more popular, they will yield somewhere in FD rate + 2-3% range due to excessive demand and not FD+5-7% currently. That the drop in yield will most likely be due to a rise in price from current levels and not due to drop of dividend pay-out is my bet. 

5.         Gems and Jewellery– Tanishq announced yesterday that it’s foraying in Lab Grown Diamond (LGD) space with its Beyon stores. This is a massive development for some of us who track a few stocks in this sector. If Tanishq, the king of genuine diamond jewellery is sensing a demand of LGD, then the demand and acceptability of such gems is likely to explode in Indian markets. Thus, a company supplying 66% of global certificates will only be making money hand over fist in years to come and a 1000 cr sales can easily become 4000 cr sales in 3-4 years, who knows!

6.         Is AI in a bubble– The entire media narrative is that AI is in a bubble and NASDAQ is likely to crash big time soon and then India will be a huge beneficiary of such event. In my opinion, this argument is utter nonsense. A bubble is not made when there are articles after articles and brokerage reports predicting a crash. It is made when everybody who was bearish turns a believer and there are global voices telling you to buy because the price is only going to go up and it does 2-3-5% every day. The people who made money get phenomenally rich and you feel stupid. So, in my view, the closest we are to a bubble isn’t in AI but in Gold and Silver. The amount of money chasing them is insane and everything which will be good is already in the price. One bad news and the crash will be so bad that those paying 2.15 lakh for a kilo of silver won’t touch it at 75000! 

 

As we end this year, I believe we can agree that we know so little about so many things and do not know anything about everything else. We have the humility to accept our ignorance and also the confidence that we will not relent in our pursuit of knowledge, ever. Happy New Year!

 

Stock markets are a continuous discounting machine. The proponents of the efficient market hypotheses will want us to assume that every news or event which has a material impact on the prices are continuously discounted or built in the price by either upwards or downwards movement in the stock so that at any given time, the price truly reflects the impact.

While I don’t really subscribe the hypothesis like a true believer, my years in the markets and readings of the history has made me realise that the markets discount at least six months into the future and even though it does react to the daily news flow, the bigger price movements happen with an eye on the way ahead, not in the rear view mirror.

Let’s s go back to some history on this. In 2008, the markets bottomed out in March of 2009 when the entire world was in shambles. The US was officially declared to be in recession only in June of 2009 whereas the markets had already moved ahead. Similarly, the market famously bottomed a day before India announced its Covid lockdown in March 2020 when the vaccine was nowhere in sight and the world still didn’t know what exactly happens in a lockdown. So the price impact on the way down happens much faster than we imagine and the bottom, though can never be predicted, happens sometime when you are actually sure that there is enough downside ahead.

So why am I talking about this topic today. I have two major talking points; one concerning with the larger market movement and the second with regard to the uncertainty on the F&O weekly expiries.

First, the Indian market has basically been negative for the past one year with relentless FII selling. Every good news has been ignored and every Trump, Dick and Harry has caused major drop on the downside. We first had the tariffs, then the 50% tariffs, then the H1B rules and now the pharma bomb. Overall, we have failed to meaningfully cross the previous year’s highs in multiple attempts.

Second, the uncertainty on the F&O expiry has caused severe price damage in broking and exchange stocks and they are moving down with every negative news which generally is source based and reported majorly on CNBC in the afternoon, leading to an almost synchronized fall in the stocks after 2PM on multiple days. The same news is later denied through other sources on other news channels and even Nitin Kamath of Zerodha publicly called out such rumor mongering recently.
While I totally believe that any strict implementation of F&O rules will lead to lower volumes and therefore revenues for all such players, I also am reminded of the fact that the market discounts the future and not the past. 

Remember how in 2022, the price of oil boiled upwards when Russia Ukraine conflict started but has since remained in the 60-70$ range even when two more wars in the Middle East are ongoing. The market kept moving up even when the vaccine for Covid was not in sight and the lockdown were in place for far longer period than originally intended. So this tells us that one piece of news causes price damage once and not repeatedly, even when the severity is higher.

So how does these stocks and the market keep falling repeatedly on the same news flow almost in sync? What I believe is that the retail has made a lot of money in the past five years and the bigger players, the institutions and the UHNIs have missed the bus as they were ill advised by their brokers. Thus, for the first time, a larger pie of the Indian market is owned by retail while the FII ownership is at multi-decade low. So, in my limited view, this is a clever tactic by large operators to tire out the retail into selling their stocks which still have a huge runway ahead by causing repeated price damage so that the stocks can be bought for cheap. Please see how the mega multi-baggers in Defence, Power etc went down 40-50% in a couple of weeks and were back to life highs soon enough.

Similar play is at work, in my understanding, in the broking-exchange stocks as well. The STT and Capital Gains tax is now a prime contributor to the central government budget especially with large reduction in GST and Income Taxes. If you think that the government will kill its golden goose with such ease that the entire fiscal math goes for a toss when major elections are around the corner, you may be reading too much. So even with all the noise around the weekly expiries, the F&O business isn’t going anywhere in India also because this is a stated policy of this government to make India a global financial hub. So, you can’t kill an industry which is torchbearer of the national flag. 

The point of maximum pessimism is also the point of highest return. The hated sectors today include the likes of IT, broker-exchanges and now possibly pharma. I would only point out to the time when for Rs. 100, you could buy almost 10 different Public sector banking stocks which later all went up 5-10x! similarly, the hated PSU stocks delivered multifold returns in not-so-distant times.

Let’s keep our eyes open and see what the price action is telling us and hopefully we can look back at September 2025 as another great time to buy in three years from now!

 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.

I’ve been an investor for eight years and an entrepreneur for two months. One thing I have learnt as a student of investing is that if you really think through, living a successful life is eerily similar to having a successful investing career.

Living a successful life has a lot riding on not blowing it up through drugs, crime or a combination of debt and splurging. If you can avoid these three, you are guaranteed to avoid a lot of self-inflicting misery but that does not guarantee that you will be successful. The first rule of investing is about making money and making lots of it. Everyone who is in this market is here to make the highest rate of return possible without blowing it all up in the process. If you avoid a lot of over-activity, leverage and panic, you are bound to not lose a lot of money but that also does not mean that you will make a lot of money either.

So what am I trying to convey here? I mean that if you study the richest investors in this world, you will realise that the absolute bests in business cant make more than 25% a year for about 20 years period. There may be an exception here in Jhunjhunwala or a Jim Simons there but at the end of the day, if you can make 15% a year for 25 years, you are a king in this world. 

Also, the best way to do this is to buy great quality stocks when there is blood on the street and sit quietly for the rest of the time. Let market go through its motions and overprice and underprice your stocks for a while but you think like a true minority owner of this business and do nothing much except adding when its selling truly cheap. How do I know this work? Well, you don’t have to look further than think of Buffett and American Express, Jhunjhunwala and Titan, Nick Sleep and Amazon and you’ll have your answer.

This is all right but what do you do as a full time investor then? If you aren’t actively buying and selling or trading the news or actively researching 20 ideas for the week and how GST cut will impact the FMCG or autos and if you aren’t going underweight this or overweight that,how exactly do you call yourself an investor? If you cant tell your friends which stock will go up because Trump did this or how some sector will collapse because theres a war in Ukraine, are you even in the markets?

Well, this is what I call the over-productivity syndrome. Every serious investor knows that the best way to invest is to do nothing during the market hours on 90% of the days but they cant keep their jobs if all they did was to buy a few stocks and did nothing. So they have to invent the newsletters, stock of the month, portfolio-constructions, conference calls with companies, calculate alpha beta delta of the portfolio, how much did the portfolio beat the index over the past three days, etc. Otherwise, the world will think that they are not serious!

What we do at Caelis is what I have termed as Sustained Productive Inactivity. Its not that fancy but since I like to play with words,its something  Ive coined to justify myself reading a book during market hours. What I mean is that those who measure productivity by the amount of paperwork they did don’t really understand that productivity in any field and specially investing requires long hours of deep thinking. In order to think through a lot of noise, you need to ingest a lot of great work in the form of books and other material of which Youtube is my favorite. The more you read and learn about the world , the more you are able to remain rational in your decision making and that’s how you generate what is called the investing gut-feeling.

What I have learnt from my reading of the greats is that deep-work is required to make serious progress in any field. Your work should be so deep that you know the A and the Z and everything around it as well. This is how Elon Musk has changed the world and this is where the genius of Nvidia and Apple and the likes have come to shape our worldviews. Deep work cannot be measured by anything except the outcome and that outcome in our case is the rate of return on invested capital. If you are able to produce serious rate of returns for long periods of time, you are on the right track. Everything else is plain noise.

As a full time investor, you are thinking about your positions 24/7 and there is no way you aren’t scared when the stocks fall and aren’t elated when they rise. The most harm you can do is to try and react to the price movement during the market hours as you are either too happy or too sad. In other cases, you are just too bored of not doing anything much and end up either trading or random buy-sell stuff. Everything in this category kills your returns. I have tried my hands at day trading for about 10-12 days in my career and in the stocks which became 20-30x for me during my holding, I have lost money every single time when I was day trading them! So much for my genius!

So now what I try to do is to remain productive by reading a lot through the day and that’s basically what I do for a living. The investing returns are made when you don’t disturb the compounding process, and this is what I am learning better by being an entrepreneur. The Indian market gives enough opportunities which if you can invest well and do nothing much, you can beat every single index or fund manager possible. This is what I call productive inactivity. As you do it for long periods of time, through sustained efforts, you are able to broaden your horizon and produce returns which are beyond imagination. 

Ben Graham, Buffett’s mentor in every sense was able to produce about 20% CAGR through 1935-1956 period which also had the worst recession and a world war! Stocks do come back to their reasonable prices even in the worst of the times. This is essential to remember especially when the markets are falling. People did survive 2008 and 2020 and every time, good businesses did see a rise in their stock prices. Panic selling and exuberant buying are the two most dangerous activities in stock market, after possibly leveraged trading.

So the next time you see me posting a book on my status, you know that’s what I do for a living!

 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.

I have been reading the Berkshire Hathaway Annual Letters recently and cannot recommend the same to you enough. Anyone who wishes to take investing seriously, even casually on his own must put in some time to read what the maestro has to say. They are easily available in pdf online or in a book which is my preferred medium. Also, before you jump on to the letters themselves, I’d recommend you to first watch a few Youtube videos featuring Buffett and Munger so that you are familiar with their style. Then, you can read a fantastic book titled Buffett and Munger Unscripted which will help you understand why these two gentlemen were the true epitome of investing and life genius.

Why am I sharing books at the beginning of my blog? This is because of the lessons I wish to revisit and share with all of you which I have learnt from the books I mentioned. First and foremost, investing is about buying minority stakes in living businesses and is more than the stock prices which quotes everyday. Most of, myself including, get a lot happy when the prices move up and are traumatized when there is a sustained bout of selling in our chosen names. The biggest advantage of having an active stock market is its biggest drawback- you are yelled the price of your holdings non-stop for 6 hours 15 minutes, 240 days a year! And youre bound to get nervous when things aren’t what you thought to be.

Here, if you think of yourself as a minority owner in the business, your philosophy changes. You realize that businesses and their stock prices may not be the same thing. A company can easily go along on its own and keep doing what it does even though the markets sell its shares down mercilessly. If you’re the owner of that company, you don’t really sell just because the price went down.

Let’s take the example of Exchange Business. Before we begin, let me give the standard disclaimer- me or my company may have interest in what stocks we discuss here but have no intention to solicit or to give any buy or sell advice from or to any of you. We do not provide any investment advice and have no such registration. So, whatever I write here is purely from the perspective of knowledge sharing. 

There is a huge buzz regarding weekly F&O expiry and what SEBI will do with them and so on and so forth. The listed player gets a beating whenever any news gets reported from Sources just like today. People are claiming on social media that it might fall 20-30 or even 80% in worse case scenarios. On the other hand, if you purely look at its business, it has gained market share from its bigger unlisted rival and has also managed to do more business on notional turnover basis on their respective expiry days after the weekly expiries were exchanged beginning the first of this month. It, thus, has been able to achieve more than any of us or even the management envisaged a year or two ago. 

Now lets also read through the tea leaves. The unlisted player had 100% of the market share two years ago and commanded huge premium in gray market. There are large well known investors who have invested in the stock and is currently a huge hit with those dealing in unlisted markets. Since the listed stock exchange introduced its derivatives product, the bigger guy has lost almost 25% of the market share and thus, isn’t growing at the breakneck speed it used to grow especially post-Covid. Also, the regulator is yet to give it the go-ahead for a listing. Thus, there appears to me a panic in large investors/operators who are stuck with the unlisted stock because none of them caught the rally which made the listed exchange a 80-90 bagger from Covid lows. 

So there is a swarm of brokers who are enticing public to take unlisted stock shares in small lots as a sure-shot ticket to heaven. On the other hand, there is a concerted effort to get retail sell their existing stock holdings by planting news from this or that source. This has been going on since at least March 2025 when it went down 40% in three weeks! Similarly, whenever there is a small rally in the stock, there is a source based news which is followed by a large bout of selling in the stock which goes down 5-10% in a day or two. This, to my mind, is a classic operator play. The large sharks want to corner the retail into selling their holdings somehow while also unloading their unlisted stock simultaneously. 

Lets also analyse a few news items on this topic. There is a large private equity and related consortium which wants to invest thousands of crores of rupees to start equity derivatives trading on two other exchnages- the Metropolitan Stock Exchange and the NCDEX. These two exchanges have already/ undergoing large fund raising exercise and are expected to commence operations by later next year. If the regulator is really going to do away with all the F&O expiries and Indian exchnages will lose all their businesses, why do you think these private equity guys putting in thousands of crores to gain 1-2% of the Indian market that too through currently moribund exchanges?

Either these guys are dumb or they are thinking like business owners. I would like to believe even though at times PE guys do act dumb but this time they are sensing the future. The Indian capital markets are at the point of take-off as our economy gets to $4 trillion. Over the next one-two decades, our markets will go from $5 Trillion market cap to well over $25Trillion market cap and where will all this money be raised and put to work at? The Exchanges, of course. So if you think that the exchanges are going out of businesses because CNBC reported that through unverified sources, you may not be thinking through it. 

I was recently talking to a few colleagues who wanted to start a mutual fund distribution business because the commissions are huge. All the major houses- Reliance through Jio, every PMS owner wants to get into the mutual fund business where unless you are in the top league, you don’t really make meaningful amount of profits. Amidst all this, you are being told that the listed players which are already managing $100 Billion plus of AUM with 55-60% PAT margins will go out of business and you sell your shares because one random analyst on TV told you so?

Always remember something. There are a lot of people in the markets who by the very nature of their job have a vested interest in trying to make you an active player. The news channels want TRP so they tell you so much news that you are overburdened by it. The CNBC guys aren’t investors, they are news sellers. They themselves aren’t in the market investing for 20-25 years but just covering the news on a daily basis. Similarly for all the analysts etc. Please understand if any of these people really invested their money for the past 10-15-20 years, will they still be doing a job for a living? No! anyone who has been invested is already a multi-millionaire owner of these people. So the next time someone advises you, please ask yourself whether the person is already a multi-millionaire or is working a job and want you to trade actively in order to make commissions.

Being a long-term investor requires a lot of patience and counter-intuitive inactivity. Its hard looking at your portfolio down 2-3-4% a day and decide to not do anything. Its harder to stay invested when the news channels are selling down your holding predicting the doomsday scenario. Its very easy to sell when it goes down and buy when its going up because you are with the crowd. And anyone telling you that investing is not a full time job because there is a lot of free time available doesn’t really knows what he is talking about.

I will end the piece with my favorite line from the recluse Invstor- Seth Klarman when he was mentioning the 2008 Lehman crisis and why he invested when there was blood on the street- “ We did not think the world was ending, We did not see how people think that the world was ending, the world doesn’t end this easily.”

 

Disclaimer- The views expressed are entirely mine and am not a registered Investment Advisor. I or my company do not provide any buy/sell advisory and have no vested interest in writing this blog except knowledge sharing!

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.

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.

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.

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. 

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.

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.

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!

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.

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!

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.