- Wealth PMS (50L+)
We’re now at 20,000 on the Sensex and nearly 6000 on the Nifty. Who’d have thunk this a couple years ago? Everyone is celebrating – The TV channels have gone berserk, as they would be expected to, and Mukesh Ambani is the richest man in the world.
First reaction: Goodness this is crazy, is this irrational exuberance? Second reaction: Big deal. This as always been exuberance, as I’ve been rattling on for the last two months. We may have a lot more to go, we may end up dead tomorrow, who knows? I’m on the “enjoy the ride” sequence.
90% of the last 1000 points were in just 6 stocks – L&T, ICICI Bank, Reliance being the real meat of the move. Yet, are we overvalued?
This is results season, and results are excellent. BHEL is up 91% on profits, HDFC up 75%, L&T up 73%, Suzlon up nearly 1000% and so on. I could go on for a bit but it seems like the fundamentals are mindblowing! This is fantastic stuff, Corporate India. These results tell me how much we can grow in real terms, and that eventually this kind of growth can help us build India. Note: This has nothing to do with stock markets – earnings growth may not be reflected in stock prices, and vice versa. In fact the past is testament to how markets have either overvalued or undervaled the economy. But strong sustained earnings growth makes to a good long term story, according to me.
Another interesting development is that FIIs were net buyers on Monday – they put in 680 cr. in NSE Cash and over 2000 cr. in derivatives. Plus, mutual funds have been buying for the last week or so, but small amounts – around 500-600 cr. per day. This is also quite good, and when domestic institution investment levels go crazy maybe there will be some cause for concern.
There is still a lot of caution in the markets, so I’m confident we’ll go up from here. It’s when we’re all euphoric is when it will come crashing down. I’m now not just invested but also leveraged and in – of course it’s money I can afford to lose so I’m ok losing a significant part of it too. Up over 45% now and going strong.
This now is going to get philosophical. My son’s taken to ghazals. He only sleeps when I play Jagjit Singh’s numbers, so I’ve been listening to a lot of them lately. So it struck a chord with me when I realised how some investors have completely missed this rally, calling the markets “overpriced” when it was 4500 Nifty/16,000 Sensex. How some stocks which were “hot” were labelled irrational and investors refused to buy them. How some commenters here were actually angry that their stocks had not even moved while the market scaled new highs. Sometimes, you miss things because you’re too focussed on “value”. In a Jagjit Singh number, quite aptly put:
Hoshwalon ko khabar kya, bekhudi kya cheez hai.
And when this all dies down – the crazy bull run, the madness to buy and sell, the insanity goes away, another number applies:
Tum chale jaaoge to sochenge,
Hum ne kya khoya, Hum ne kya paaya.
Right now, I’m just riding with the trend. Phir karenge hisaab, ae saaqii.
Disclosure: Long everything.