Track your Portfolio

Login / Sign Up

Category: Insights

Posted on

The World Does Not End, and Equities Never Die

In a world filled with uncertainties and rapid changes, one thing remains constant: the persistence of human ingenuity and innovation. The adage “the world does not end, and equities never die” serves as a reminder of our ability to adapt, evolve, and find new opportunities even in the face of adversity.

A Resilient World

“The world does not end” is a statement that reflects the undeniable fact that no matter how dire circumstances may seem, humanity has a remarkable capacity to endure and persevere. Throughout history, we have faced numerous challenges, from wars and economic crises to natural disasters and pandemics. Yet, each time, we have emerged from these trials stronger and more resilient than before.

The global economy, for instance, has weathered its fair share of crises, from the Great Depression of the 1930s to the financial turmoil of 2008. In each case, the world did not come to an end. Instead, it adapted and rebuilt, demonstrating the remarkable resilience of human society.

“Equities never die” refers to the enduring value of assets and investments, especially in the context of financial markets. It emphasizes that, despite market fluctuations and temporary setbacks, long-term investments have historically shown an ability to recover and grow over time.

This concept is particularly relevant in the world of stocks. While stock markets can experience volatility and sharp declines, history has consistently demonstrated their capacity to rebound and reach new heights. This is a reflection of the underlying strength of the Indian economy and the potential for equities to provide substantial returns over extended periods.


Every crisis in the past has been followed by a recovery and further upside.  Sensex (1980-till date):A

India outperformed despite following crises, events and volatility:

 

Episodes of Domestic Political Uncertainty

  • 8 coalition governments

  • 3 different governments between 1996 and 1998

  • A government that lasted only 13 days in 1996

  • Prime Ministers that many have not heard of: H.D. Deve Gowda; I.K. Gujral

  • 17% fall in market in a day due to surprise change of govt in 2004

 

Other India Specific Events from 1998 to 2015

  • US sanctions after India’s nuclear tests, May 1998

  • Limited war with Pakistan in Kargil in 1999

  • Serious stock market scandal in 2001

  • Terrorist attack on Indian parliament in2001

  • 26/11 terrorist attacks in Mumbai

  • Corruption cases & arrest of billionaires/ministers /senior bureaucrats in 2011/12

  • Back-to-back drought years in 2014 and 2015

 

Global Market Crashes and Crises since 1997

  • Asian Crisis in 1997

  • Russian crisis in 1998 (India has had historically strong trading ties with Russia)

  • Bursting of technology bubble in 2000

  • 9/11

  • Global Financial Crisis in 2008

  • Tech sell off, end of QE and rising inflation(since 2022)

 

Recent Key Events Since 2016

  • Demonetization (2016)

  • NBFC Crises (2018/2019)

  • COVID (2020-2022)

  • Lockdowns (2020-2022)

  • Rate hikes globally

There is always a reason not to buy Equities. Yet despite several intermittent crises, Indian Equities have gone up over the long run mirroring earnings growth:

Despite challenges and uncertainties, the Indian stock market continues to evolve and grow. Investors who approach the market with a long-term perspective, diversification, and a thorough understanding of the regulatory landscape can find opportunities amidst the volatility.

 

India’s resilience in the face of crises has been stark, and the clean-up and reforms alongside various crises have set the stage for India to outperform over the coming decades.

Posted on

Global Banking Giants Are Betting Big on India’s Growth Story

India has been structurally outperforming other markets by a significant margin in the past (even in USD terms) 

Prominent global investment banks have recently upgraded India’s status to “overweight” in their portfolios, underlining the nation’s robust economic fundamentals and alluring valuations. This development holds significant promise for both the Indian economy and its capital markets, reflecting the confidence of investment experts in India’s potential for growth in the forthcoming years.

Key statements from investment bankers in recent times include:

  • In October 2023, JP Morgan raised India’s status to “overweight,” citing the nation’s strong GDP growth, appealing risk-adjusted returns, and favorable historical seasonality preceding general elections.

  • CLSA increased India’s portfolio allocation from “40%underweight” to “20% overweight” in October 2023, emphasizing India’s solid economic fundamentals and attractive valuations.

  • Japan’s Nomura adjusted India’s weight from neutral to overweight in October 2023,highlighting India’s robust economic fundamentals and appealing valuation in comparison to other emerging markets.

  • Morgan Stanley upgraded India to “standout overweight, “driven by improvements in relative economic and earnings growth and a macro-stability setup well-suited to navigate a higher real rate environment.

  • The global head of equity strategy at Jefferies elevated India’s weight in the Asia ex-Japan relative portfolio, as detailed in the Greed & Fear note.

  • Goldman Sachs expressed optimism about India’s medium-term growth prospects, recommending foreign investors to increase their exposure to the emerging market due to its stable macroeconomics and strong historical track record.

Among other leading global investment firms, EQT AB from Sweden, Barings in the United States, and BlackRock have all increased their investments in India. Several sovereign wealth funds, including the Public Investment Fund of Saudi Arabia, Abu Dhabi’s Mubadala Investment Co., and Qatar Investment Authority, have also expanded their investments in India.

This year our clients have inquired about investment opportunities in India at a rate we haven’t seen in over a decade. We view this renewed interest in the country as justified and likely to persist.

-Solita Marcelli, Chief Investment Officer, UBS Global Wealth

Implications of these “overweight” ratings are substantial in the long term:

  • Increased Investment: A positive stance from reputable banks can attract more foreign and domestic investors to the Indian stock market. This increased investment can drive up demand for Indian stocks, potentially leading to higher stock prices.

  • Improved Market Sentiment: Favorable outlooks from leading banks can boost investor confidence, leading to higher trading volumes and increased market activity.

  • Access to Capital: Companies listed on the stock exchange may find it easier to raise capital as investors are more willing to buy their shares.

  • Lower Cost of Capital: A positive outlook can result in a lower cost of capital for Indian companies, making it more affordable for them to borrow funds or issue new shares.

  • Sectoral Focus: Investment banks may highlight specific sectors or industries within India that they believe will outperform, leading to increased investment in those areas.

  • Boost in IPO Activity: More companies may choose to go public through initial public offerings (IPOs when they see a favorable investment climate, leading to increased IPO activity on the stock exchange.

  • Market Liquidity: Higher investor participation can increase market liquidity, making it easier for investors to buy and sell stocks.

  • Economic Confidence: A positive outlook from investment banks can boost overall economic confidence and consumer spending, positively impacting the earnings of listed companies.

  • Longer-Term Investments: Investors may consider longer-term investments in Indian stocks based on the favorable outlook, which can lead to a more stable and less speculative market.

  • Market Capitalization Growth: With more investors entering the market, the total market capitalization of the stock exchange can grow, reflecting the overall size and strength of the market.

  • Currency Appreciation: Increased foreign investment can lead to the appreciation of the Indian Rupee, which can further attract foreign investors and provide stability for investors.

  • Research and Analysis: Investment banks with an overweight stance often provide in-depth research and analysis, which can help investors make informed decisions and navigate the Indian stock market effectively.

Posted on

The Hard Decision Warren Buffett Made 30 Years Ago

In the ever-evolving world of finance and investing, one name stands out for its enduring success and wisdom: Warren Buffett. What truly distinguishes him is not solely his remarkable wealth but also the pivotal decisions he has made throughout his illustrious career.

 

One such decision, which has become a remarkable case study in the world of finance, took place in the early 1990s when Warren Buffett faced a critical choice: to invest in stocks or bonds.

 

During that period, a 30-year government bond offered an attractive interest rate of 6.15%, while the dividends from his shortlisted companies, Coca-Cola and American Express, stood at 5.7% and 3.15%,respectively. For many conservative investors, the allure of the higher bond interest rate might have been compelling. However, Warren Buffett, known for his long-term vision and deep understanding of investing dynamics, chose to invest in stocks.

 

Fast forward to today, and the results of that decision are nothing short of remarkable. The bond still holds its original value ($1.3 billion), while the investments in Coca-Cola and American Express have appreciated exponentially. A$1.3 billion investment in Coca-Cola is now valued at $25 billion, and the same $1.3 billion in American Express has grown to $22 billion. Moreover, the dividends generated from these investments today stand at $704 million for Coca-Cola and $302 million for American Express, far surpassing the interest Buffett would have earned today ($80 million) on his bond investment had he made that choice 30 years ago.

In Buffett’s own words, “If you had to choose between buying long-term bonds or equities, I would choose equities in a minute.”

 

This compelling story serves as a testament to the power of long-term investment strategies and the foresight of a true financial genius. It reminds us of the potential rewards that come with investing in stocks when viewed from a perspective that extends beyond the short term.

 

Please feel free to reach out if you have any questions or thoughts on this topic or any other financial matters.

Posted on

The Jewish Wealth Legacy: How Jewish Families Educate Kids About Money

The Jewish community has earned a reputation for its remarkable prowess in money management and wealth creation. A testament to this is the presence of five Jewish individuals among the top 10 wealthiest Americans, including notable figures like Mark Zuckerberg of Facebook, Larry Ellison of Oracle, Larry Page of Google, Sergey Brin of Fellow, and Michael Bloomberg.

Remarkably, while Jews constitute just 3% of the American population, they account for a staggering 67% of Forbes 400 richest Americans.

In the quest for financial acumen, I have delved into numerous books expounding on the art of prudent money management and debt resolution. However, it is the straightforward yet immensely practical approach employed by the Jewish community that has seized my attention and kindled my imagination. This approach centers on the financial education provided to Jewish children from an early age.

 

Within Jewish culture, the process of teaching children about money commences almost as soon as they are able to articulate words. This practice is deeply rooted in an understanding of the biblical adage, “Teach a child the way of the Lord, and when they will grow, they will not depart from it.” Consequently, the transmission of financial knowledge to the younger generation is an integral facet of Jewish heritage. Children, characterized by their receptive nature and eagerness to learn, serve as ideal recipients of these teachings.

To cultivate wise money management skills in their offspring, Jewish parents employ a practical tool: five labeled jars, akin to contemporary piggybanks or home banks. Each jar is designated for a specific financial purpose and features an accessible top for ease of use. These jars bear the labels TITHE, GIVING & OFFERING, SAVING, INVESTING, and SPENDING. Whenever a child receives an allotment of 10 Shekels, the currency of Israel, they are provided with the following instructions for allocation:

–One Shekel shall be apportioned to the TITHE jar (equivalent to10% of the allotment). This practice, deeply rooted in Jewish philosophy,instills in the child the virtue of generosity by prioritizing contributions tocharitable causes.

–Another Shekel shall be earmarked for the GIVING & OFFERING jar(also constituting 10% of the allotment). This principle reinforces the notionthat one should prioritize the needs of others before tending to their own,emphasizing a sense of social responsibility.

–One Shekel shall be reserved for the SAVINGS jar (equivalent to 10% ofthe allotment). This allocation is intended to serve as a financial cushion forunforeseen emergencies, teaching the child the importance of fiscal planning toaddress unexpected financial challenges that may require immediate attention.

–Two Shekels shall be dedicated to the INVESTING jar (20% of theallotment). This allocation encourages the child to develop an earlyunderstanding of investment and the potential for wealth accumulation overtime.

–The remaining five Shekels shall be designated for the SPENDING jar (50%of the allotment). This allocation allows the child to manage discretionaryexpenses for their personal use.

The rules governing access to these funds vary: the GIVING jar may only be opened on Sundays, the TITHE jar is unsealed at month-end, the SAVINGS jar is reserved for special occasions or emergencies, and the INVESTING jar is unlocked when it reaches full capacity. Crucially, the child exercises complete autonomy in determining when and where to invest the accrued funds, with parents refraining from intervention, even in the face of potential missteps. The Jewish tradition holds that failure serves as an invaluable teacher, fostering creativity in decision-making and nurturing a sense of responsibility for one’s choices.

Research attests to the formidable challenges posed by financial management in our lives. Successfully navigating this terrain can significantly ease the management of other life aspects.

Consequently, Jewish children, armed with a strong sense of responsibility and financial acumen, often experience heightened satisfaction and success compared to their peers. In stark contrast to the credit card debt woes experienced by many Americans and Europeans, the dispersed Jewish community thrives in both personal finances and business endeavors.

For those of us who did not have the privilege of undergoing these transformative lessons in our early years, there are valuable lessons to be gleaned. First and foremost, making a concerted effort to impart financial wisdom to our own children is among the most worthwhile investments we can make in their future. Additionally, adopting a receptive attitude and embracing these principles, regardless of age, can yield significant benefits. While it may seem unconventional, embarking on this financial journey, perhaps alongside your children, can prove rewarding.

In summary, the financial teachings passed down within the Jewish community serve as a compelling model for instilling responsible and informed money management from an early age. By embracing these principles and passing them on to future generations, individuals and families can empower themselves to achieve financial stability and success.

Posted on

India’s Remarkable Journey from ‘Fragile Five’ to World’s Most Sought-After Investment Destination

India, a land rich in history, culture, and diversity, has undergone a transformative economic journey over the past few decades. From being labeled as one of the “Fragile Five” emerging economies with vulnerabilities in 2013, India has emerged as one of the world’s most sought-after investment destinations in just a matter of 10 years. This remarkable transformation is a testament to the country’s resilience, policy reforms, and commitment to growth.

The Fragile Five and Economic Challenges:

In the aftermath of the 2008 global financial crisis, India, along with Brazil, Indonesia, Turkey, and South Africa, was branded as part of the “Fragile Five.” These countries exhibited economic vulnerabilities such as high inflation rates, fiscal deficits, current account deficits, and weak currencies. India faced challenges like inflationary pressures due to rising food and fuel prices, a large fiscal deficit, and a persistent current account deficit.

2013: Morgan Stanley coined India as a part of ‘Fragile Five’

2023: Morgan Stanley upgraded India to No. 1 slot in its emerging market portfolio

Structural Reforms and Policy Initiatives:

Recognizing the need for comprehensive reforms, India embarked on a path of transformation. The government, under the leadership of Prime Minister Narendra Modi, initiated a series of policy measures to address these vulnerabilities and promote sustainable economic growth. Key reforms included the Goods and Services Tax (GST) implementation, the Insolvency and Bankruptcy Code (IBC), and the “Make in India” campaign to boost manufacturing and enhance the ease of doing business.

Digital Revolution and Innovation:

One of the pivotal factors in India’s transformation has been its digital revolution. The rapid expansion of internet connectivity and the adoption of digital payment systems through initiatives like “Digital India” have led to increased financial inclusion and economic empowerment. Moreover, the country has witnessed a burgeoning startup ecosystem, with innovative companies across sectors like technology, e-commerce, and fintech attracting significant investments.

Foreign Direct Investment (FDI) Surge:

India’s commitment to economic reforms and its demographic advantage have attracted substantial foreign direct investment (FDI). Sectors like information technology, renewable energy, pharmaceuticals, and retail have witnessed significant inflows of FDI. The government’s efforts to simplify FDI regulations and improve the ease of doing business have further boosted investor confidence.

Infrastructure Development:

India’s focus on infrastructure development has been a driving force behind its transformation. Massive investments in transportation, energy, and urban development projects have not only created jobs but also improved connectivity and quality of life for its citizens. Initiatives like “Smart Cities” and the development of industrial corridors have modernized urban centers and bolstered economic growth.

Geopolitical Significance:

India’s economic resurgence has not only contributed to its own growth but has also elevated its global geopolitical significance. The country’s large and diverse market, skilled workforce, and strategic location have made it an attractive destination for international businesses seeking to expand their footprint in the Asia-Pacific region.

Challenges Ahead:

Despite its remarkable progress, India still faces challenges on its path to sustained growth. Income inequality, inadequate access to quality education and healthcare, environmental concerns, and bureaucratic red tape remain areas that require attention. Continued efforts to address these issues will be crucial for inclusive and sustainable development.

Conclusion:

India’s transformation from being part of the Fragile Five to becoming one of the world’s most sought-after investment destinations is as tory of resilience, reform, and innovation. The nation’s commitment to economic liberalization, infrastructure development, and technological advancement has propelled it into a new era of growth and global influence. As India continues to navigate its journey, its ability to overcome challenges and embrace opportunities will determine its place on the global stage for years to come.

Posted on

Your Antidote to Boring SIPs

The conventional wisdom surrounding systematic investment plans (SIPs) often paints them as dull and uneventful. However, we’re thrilled to introduce compelling solutions that redefines the investment landscape and empowers you to break free from the monotony (and at the same time create more wealth).

 

Our team has meticulously crafted three distinct SIP strategies designed to optimize returns and minimize risk. Each strategy leverages different mechanisms to ensure that your investments yield exceptional results.

 

A. Step-Up SIP: Gradual Growth with Every Year:

 

Our Step-Up SIP strategy introduces a controlled increase in investment amount year by year. This gradual escalation, by 10% annually, ensures a steady progression of your investment journey. For instance, an initial monthly SIP of Rs. 10,000 will evolve to Rs. 11,000 in the subsequent year, and further to Rs. 12,100 in the second year, and so forth. This incremental approach is tailored to align with your financial growth trajectory.

 

B. Dynamic SIP: Seizing Opportunity Amidst Volatility

 

Our Dynamic SIP strategy capitalizes on market volatility to optimize returns. Whenever the Net Asset Value (NAV) of the fund experiences a 10% correction, the monthly investment amount is doubled until the fund’s NAV regains its original value. For instance, a Rs. 10,000 monthly SIP could potentially surge to Rs. 20,000 if the fund’s NAV corrects by 10% and subsequently recovers to its original NAV. This strategy allows you to harness market downturns for greater gains.

 

C. Combination of Step-Up + Dynamic SIP: The Best of Both Worlds

 

Our Combination Step-Up + Dynamic SIP strategy amalgamates the benefits of controlled annual increments and market-responsive doubling. With this strategy, your SIP amount increases by 10% each year, and in addition, doubles when the fund’s NAV corrects by 10%. This synergistic approach optimally balances consistent growth with capitalizing on market dynamics.

Empirical Validation: Nippon India Growth Fund (erstwhile Reliance Midcap Fund) Backtesting

To substantiate the efficacy of our innovative SIP strategies, we conducted rigorous back testing using one of India’s oldest midcap funds, the Nippon India Growth Fund* (inception date: October 08, 1995). The results were nothing short of remarkable.

A conventional SIP approach with this fund since inception would have yielded the following outcomes:

However, the three approaches highlighted above yielded the following results:

In conclusion, our innovative SIP strategies offer a dynamic perspective on wealth accumulation, each tailored to suit your risk appetite and financial objectives. The empirical validation of these strategies using Nippon India Growth Fund underscores their potential to yield exceptional results.

As Warren Buffet famously stated, “Investing is simple but not easy.”

This principle holds true when examining the historical performance of the Nippon Growth Fund, which endured significant corrections of up to 50% during key market events [Dot Com Burst (2001), Global Financial Crises (2008), and COVID-19 (2020) and prolonged periods of minimal returns (2000-2004, 2010-2014, and 2017-2020). Remarkably, despite these challenges, the fund has delivered an impressive annualized return of close to 21%. This echoes Buffet’s wisdom to seize opportunities amid market fluctuations, as well as his counsel to be cautious when others are exuberant and bold when others are apprehensive.

*The decision to exclude Nifty/Sensex from our backtesting analysis was predicated on our perspective that over an extended temporal scope, Midcaps are poised to exhibit superior performance in comparison to Nifty/Sensex. This assessment is grounded in the belief that Midcaps present a more favorable risk-reward proposition than both smallcap and the Sensex/Nifty index.

Posted on

Contrarian investing: Why it pays to be different

Investing in the stock market requires a strategic approach and a thorough understanding of market trends and dynamics. One popular adage that resonates with investors worldwide is “Buy low, sell high.” This notion encapsulates the essence of investing in underperforming sectors.

Investing in underperforming sectors is often referred to as the contrarian approach. It involves taking a position opposite to prevailing market sentiment, which is usually bearish during times of sector underperformance. Contrarian investors believe that markets are not always efficient and tend to overreact to short-term events, leading to undervaluation of certain sectors or stocks.

Advantages of Investing in Underperforming Sectors

  1. Lower Entry Price: Investing in underperforming sectors allows investors to purchase stocks at lower prices. When the sector eventually rebounds, these investments can yield significant returns.

  2. Potential for High Returns: As underperforming sectors recover, stock prices have the potential to surge, providing investors with attractive gains.

  3. Reduced Downside Risk: While any investment carries inherent risks, buying into underperforming sectors at low prices can mitigate potential losses since stock prices are already discounted.

  4. Diversification Benefits: Adding underperforming sectors to an investment portfolio can enhance diversification, reducing overall portfolio risk.

  5. Long-Term Growth Opportunities: Industries experiencing temporary setbacks may have long-term growth prospects that investors can capitalize on.

Examples of successful contrarian investments in the Indian equity market:

IT Sector (2001-07):

During the dot-com bubble burst in the early 2000s, the Indian IT sector faced significant underperformance. However, contrarian investors who recognized the long-term potential of the industry were rewarded handsomely as the sector rebounded and experienced remarkable growth in subsequent years.

During 2000-01, IT sector corrected by 85% – providing a reasonable valuation to invest.

A SIP in ICICI Prudential Technology Fund (from 2001-2007) delivered an annual return of 44%.

Banking Sector (2008-10):

 

In the wake of the global financial crises, India’s banking sector faced considerable challenges. However, those who adopted a contrarian approach and invested in fundamentally strong banks witnessed substantial gains as the sector rebounded amidst economic recovery.

During 2007-08, banking sector corrected by 60% – providing a reasonable valuation to invest.

A SIP in Nippon India Banking Fund (from 2008-2010) delivered an annual return of 50%.

Auto Sector (2019-2023):

The Indian auto sector faced a slowdown during 2019-20 due to various factors, including economic slowdown, liquidity crunch, and changes in regulations. Many leading automobile companies’ stock prices experienced a significant decline. However, investors who recognized the sector’s importance in the Indian economy and its potential for recovery made strategic investments. As the economy gradually improved and consumer demand picked up, the auto sector started to rebound, leading to substantial gains for those who invested during the downturn.

During 2018-20, auto sector corrected by 60% – providing a reasonable valuation to invest.

A SIP in UTI Transportation Fund (from 2019-2023) delivered an annual return of 23.25%.

Pharmaceuticals Sector (2017-2021):

 

In 2017 & early 2018, the Indian pharmaceutical sector was under pressure due to increased scrutiny by regulatory agencies, pricing pressures in international markets, and increased competition. As a result, several pharma stocks witnessed a bearish trend, creating an opportunity for contrarian investors. Investors who had confidence in the long-term growth prospects of the Indian pharmaceutical industry and chose fundamentally strong companies with robust pipelines benefited from the sector’s eventual recovery.

 

During 2016-20, pharma sector corrected by 45% – providing a reasonable valuation to invest.

A SIP in DSP Healthcare Fund (from 2019-2021) delivered an annual return of 46%.

Smallcap funds:

Contrarian investing can be applied to funds based on market capitalization as well (Large, Mid and Small). Smallcaps performed very poorly from 2018-2020, correcting by 50-80% in some cases. In mid 2020, we recommended to invest in UTI Smallcap Fund to take the benefit of cheap valuation of smallcaps. Today, the portfolios highlight the return of the contrarian call we made.

While the contrarian approach can be rewarding, it is essential to acknowledge its inherent risks:

  1. Market Timing: Identifying the right time to invest in an underperforming sector can be challenging, as market sentiment can be unpredictable.

  2. Fundamental Analysis: Investors must conduct thorough fundamental analysis to ensure they invest in fundamentally strong companies within the underperforming sector.

  3. Patience and Long-Term View: Contrarian investments may take time to materialize (usually 2-4 years), requiring patience and a long-term investment horizon.

 
 Conclusion

 

Investing in underperforming sectors can be a prudent strategy for those willing to adopt a contrarian approach. By purchasing undervalued stocks during periods of underperformance (preferably through SIP), investors position themselves to benefit from potential future growth when the sector eventually rebounds. However, successful implementation of this strategy necessitates careful research, sound fundamental analysis, and a long-term perspective.

Posted on

Investing in the US markets

In the last twelve years, US technology index – NASDAQ 100 has delivered 544% – almost double of Sensex (220%). Even better, if one would have invested from India, the investor would have earned a return of approx. 1,000% just because of dollar appreciation from INR 45 per dollar to INR 83 per dollar. Hence, international exposure to US stocks can not be avoided in the portfolio.

Here are the key benefits of investing in US markets (NASDAQ 100) from India:

1. Access to 100 of the largest non financial companies:

Following 10 companies by market capitalization have a weightage of 50% in NASDAQ 100:

2. Hedge against INR depreciation:

As evident from the chart below, an investor earned around 5X returns over Sensex in the last 12 years just by investing in ETFs of NASDAQ 100 from India.

3. Global exposure:

NASDAQ-100 Index comprises of companies with overseas business &  generates the bulk of their revenue from different countries.

It comprises of large multinational companies with focus on disruption.

4. High-growth & innovative large cap companies

 

NASDAQ-100 companies on an average spend 3.5x more than S&P 500 index companies for R&D. 62 companies in NASDAQ 100 in near past have filed patents across 34 key areas of disruptive technology.

5. Exposure to “new economy” sectors

NASDAQ 100 is market capitalization weighted index comprised of 100 most innovative and rapidly expanding non-financial Companies. US economy growth is shifting from capital intensive, traditional industries to the new economic sectors such as healthcare, technology and consumer. Last 10 years sales growth across industry in US large and Midcaps can be seen in Real Estate, healthcare and technology.

6. Sector and geographical diversification

However, there are certain points one should consider before investing in the US markets:

 

  1. Volatility: US markets are more volatile than Indian markets;

  2. Taxes: W.e.f. 01/04/2023, Indian government will tax foreign funds, foreign ETFs and foreign stocks at per the slab rate of investors (without the lower tax of 10% as applicable for Indian equities);

  3. Currency exchange rates can be unfavorable at times;

  4. Higher interest rates may affect the growth of companies listed in US which may be evident in lower stock returns.

  5. Since these companies generate most of their revenues across the world, a recession may affect the stock returns  in near term.

 

However, for the long run, we remain bullish on companies listed on NASDAQ 100. An investor with aggressive risk appetite or suitable investment objective (foreign children education or world tour etc.) may consider investing in the US markets. For more information, kindly connect with your respective relationship manager.

Posted on

Sleeping Elephant Is Rising

As per Maddison (2020) estimates, India’s share in the global GDP was 24% in 1700. By 1820, this number fell to 16% and by the time of independence, the number had fallen to 5%. In 250 odd years, India went from contributing a quarter of global GDP to less than 5%.

 

As India completed 75 years of independence, we witnessed much change. The Indian economy now stands as among the largest and fastest growing in the world, truly breaking free from the shackles of colonialism. The changes are not just been effected at a micro level. The big picture has not been lost in this quest as well:

  • The Insolvency & Bankruptcy Code, 2016: Not only was starting a business in India a mammoth task, but shutting one down was perhaps an even bigger one. The introduction of IBC brought the much needed clarity in the bankruptcy law.

     

  • Goods and Service Tax, 2017: considered as the most landmark reform of independent India. Prior to GST, a litany of indirect taxes exited – each requiring separate registration and filing norms. Indirect taxes varied across states and hampered interstate movement of goods. GST revenues have been above the Rs.1.4 lac crore for 12th continuous month.

     

  • Real Estate Regulatory Authority (RERA): not only protected the rights of homebuyers but also promoted the development of private enterprise by maintaining their solvency and creditworthiness.

     

  • Direct taxes: Year 2017 saw a lowered personal income tax rate, and in 2019, corporate taxes were reduced to 22% to counter underreporting of income and the black economy. The introduction of taxpayers charter, efforts to reduce litigation and use of technology have moved the system away from one of enforcement to facilitation.

     

  • Ease of doing business: When Modi government took over, India was ranked 142 in the rankings published by the World Bank. Close to 1500 old legislations were identified and scrapped. In 2020, India’s rank improved to 64 – a 79 position improvement in just 5 years.

     

  • Foreign Direct Investment: Foreign Investment Promotion Board (‘FIPB’) was abolished in 2017. Several sectors that required approval prior to investment were moved to the automatic route. For rest, individual ministries became approval authorities. India received the highest-ever FDI inflows of $ 84.8 bn in FY 22.

  • The process of registration of patents and trademarks was completely revamped and a large number of additional examiners were recruited. Compared to 2015-16, number of patents filed increased from 12,000 to 28,000 and the number of trademarks increased from 65,000 to 2.5 lacs in 2020-21.

     

  • Production Linked Incentives (PLI) schemes were introduced to boost size and scale in manufacturing. Focus shifted from providing support towards target linked output rather than input. Total production from PLI schemes is estimated to be $500 billion over the next few years. PLI schemes have potential to generate approx. 60L jobs in next few years.

     

  • Definition of MSME was revised. Micro enterprise defininition raised investment threshold to Rs. 1 crore (from Rs. 25 lacs) and adds turnover of less than Rs. 5 crore as an additional criteria. Investment threshold of Small & medium firms have been doubled.

     

  • Four labour codes – Code on Wages, 2020; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health & Working Conditions Code, 2020 – subsumed 29 central labour laws.

  • Infrastructure:

     

  • India has spent $14 trillion on infrastructure in the 75 years since independence. 50% of that (or $7 trillion) was spent in the last 9 years.

  • The pace of building National Highways increased from 12KM per day in 2014-15 to 37 KM per day in 2020-21.

  • Sector specific programmes such as Bharatmala (highways), sagarmala (ports), UDAN (air travel) were announced.

     

  • Close to 55% bank accounts opened in the world during 2015-18 were opened in India leveraging the simplified KYC norms.

     

  • National Payments Corporation of India – Unified Payments Interface (UPI) processed 6.8 billion transactions amounting to Rs. 51 billion in 2022.

     

  • 112 backward districts are being transformed under Aspirational Districts Programme (ADP).

     

  • In 2016, Startup India was launched. A bundle of laws were eased and income tax exemption was granted. Since then, 65,000 startups have been recognized. India’s startup ecosystem is third largest in the world.

India’s growth story will be led by the private sector, with the government playing the role of enabler and a facilitator.

 

A growth rate of 6% during 2022-47 will see Indian economy reach $16,4 trillion by 2047, a growth rate of 8% in this period will see economy reach a size of $20.6 trillion and a 10% will take economy to $32.6 trillion.

 

Source: Made in India by Amitabh Kant

Posted on

Financial Lessons From Shrimad Bhagwat Geeta

Bhagavad Gita is the divine discourse spoken by the Supreme Lord Krishna himself and is the most popular and well known of all the sacred scriptures.

 

Mahatma Gandhi once said “When doubts haunt me, when disappointments stare me in the face, and I see not one ray of hope on the horizon, I turn to Bhagavad Gita and find a verse to comfort me; and I immediately begin to smile in the midst of overwhelming sorrow. Those who meditate on the Gita will derive fresh joy and new meanings from it every day.”

 

It is an unquestionable fact that schools and colleges gives us knowledge but Bhagavad Gita gives us wisdom and even the greatest people on this planet seek wisdom in tough situations.

 

Hence, in the subsequent paragraphs, we have shared key principles from Bhagavad Gita that may benefit you in the investment journey:

    1. Control your emotions: The Bhagavad Gita teaches us that it is important to control our emotions, including fear, greed, and anger, when making investment decisions. Emotional decisions can lead to irrational choices that may negatively impact our portfolio.

       

    2. Focus on long-term goals: The Gita emphasizes the importance of focusing on the long-term, rather than short-term gains. Similarly, when investing, it is important to have a long-term investment horizon and focus on achieving your financial goals.

       

    3. Practice detachment: The Bhagavad Gita teaches us to practice detachment from the outcome of our actions. In investing, this means we should not become too attached to any particular stock or investment, and be prepared to sell it if necessary.

       

    4. Embrace uncertainty: The Gita teaches us that the only thing that is certain is uncertainty. Similarly, in investing, it is important to acknowledge that there will always be risks and uncertainties associated with investing.

       

    5. Be patient: The Bhagavad Gita emphasizes the importance of patience and perseverance. Similarly, when investing, it is important to be patient and avoid making impulsive decisions based on short-term fluctuations in the market.

       

    6. Focus on the process: The Gita teaches us to focus on the process rather than the outcome. In investing, this means focusing on a sound investment strategy and sticking to it, rather than trying to chase after quick gains.

       

    7. Seek knowledge: The Bhagavad Gita emphasizes the importance of seeking knowledge and wisdom. Similarly, in investing, it is important to educate ourselves and seek out information and insights that can help us make better investment decisions.

Onesta Capital Ventures is a Multi Family Office based out of Gurugram (India). We aim to provide tailored independent wealth management and other family governance solutions to individuals and corporates.

Download Mobile App

Apple Android
Quick Links
Our Services
Get In Touch

Office Address

207-208, 2nd Floor, Apna Bazar, Gurudwara Road, Gurgaon 122001

Call Us

+91-9810423511

Send us Email

support@onestacapital.in

Facebook Instagram

AMFI Registered Mutual Fund Distributor | ARN-224076 | Initial Date of Registration: 04 March 2022 | Validity: 03 March 2028

Copyright 2022. Onesta Capital Ventures. Disclaimer | Disclosure | Privacy Policy | Terms & Condition