First of all, thanks for all those, who have placed their confidence in me.
Brief about last year
I was wrong in pointing some of the things such as
- Some of the mid caps will become small caps. Most of them are still holding up.
- Market will fall by at least 20-30%. Market increased to historic high (but it again dropped)
- One particular stock, where I was horribly clueless was DMART but they did well. (I am still clueless on this stock as I feel there are long term headwinds against it) I advised exit at 1100 and stock has gone upto 1500
I was right in
- Predicting overall downward trend
- Increase in interest rates
- RBI holding firm against Govt. pressure
- Rightly predicted that USD will rise and IT and Pharma will outperform
- Bandhan - This is my all time favorite, not because I am highly influenced by pen of Tam Bandhopadhya, I believe Ghosh is one of those idealistic/honest person in banking industry, crowded by Chanda Kochars, Puri, Rana Kapoors. I am still confident about Bandhan story, if management can manage all the levers well.
Overall - I have been negative on the Indian markets from last 1 year and I am still negative. My view is still same - Market is still very expensive and does not make sense to me
How long will I wait?
- Till PE drops below 20-22 (currently it is 25), I will not even look into individual company valuations
- What after PE <22 analysing="" and="" companies="" i="" in="" individual="" jump="" li="" of="" pe="" start="" the="" valuations="" whenever="" will="">
- I am still waiting for the day, when the market will drop to the level of 16-18, Aha! Aha!....(remember that old tomato ketcup ad), it will surely come
Predictions about next year
- Global Macro - US may keep on growing till increase increase in interest rates start pinching the companies. Brewing Geopolitical risks (other than NK) may dampen the ongoing bull run from 2008.
- Indian Elections - Can go anyway, but this will definitely lead to some shake up, esp if the mahagathbandan is formed and BJP is out of Rajasthan, MP, Chattisgarh
- Banking sector - may see revival, private banks best bet. NBFC will see downward spiral. DHFL, Indiabulls and many others may get bankrupt or get acquired. Short term capital players, such as Bajaj will also face major headwinds and competition
- Current Bear market - may go on till centre elections are over, there after retail investors and FIIs may return back to the market
- Interest rates - Once the US fed hits the ceiling and the election dust settles, then interest rates in India may also come down
My Advice
- Sit on the side - this is not a market to participate as there are lot of volatility triggers
- Dont invest in bonds of NBFC's which are floating at very attractive yields
- Don't look at falling knives, they are very tempting, but they have hurt, whosoever try to hold them. Beware, they are tempting
- Wait for Centre elections
- My favorite at the moment - TATA Motors because they seems to be getting the right mix and may be destined to snatch market from others
- Even if you feel that urge to "missing the ride".
- Ride only the long term bets or Large Caps, if still clueless
- Sectors - Private Banks, Select PSU Banks (the one which stands to gain from NBFC)
- Pharma is my long term bet, so if something is below the intrinsic value, i will again place my bets on this
- Still exploring - Pure Gold Loan companies, with more than 80% of business in gold related lending
Disruptions
- Regional Parties show good results
- Iran
Distractions
- Trade War - Its already factored in and may subside from here
- Congress led Govt - Wont matter much to the market,
