Tuesday, March 19, 2013

Should the Indian Investor Panic?

"Be Fearfull when everyone is Greedy and be Greedy when others are Fearful"

Ironic that analysts who quote Warren Buffett regularly,start advising investors to hold their buy decisions the moment the market starts to go down.
There will always be 'black swans' as stated by Taleb but does that mean that companies growing at 6-8% YoY will suddenly halt.In the Indian context will a Tatasteel stop selling steel or a Tata Motors stop selling cars?Yes the sales QoQ basis will show a 50-100bps decline over three or four quarters.
Human memory always remembers the near date events.When the subprime crisis hit in 2008,it looked as if Stockmarkets and Wall Street would pull down shutters.Today,five years from the tumultous events and the fall of Bearn Stearns the 'pundits'are talking the same line!
Life goes on.Short of a catalysmic armageddon,alien invasion or World War III,the cycle of boom and bust will continue.Those firms that fail to innovate or keep in touch with customers will merge,get sold or perish.
Analysis is all about trying to see the bigger picture and even that is difficult at the rate at which technology is changing and changing the Lifestyle patterns.There was a time in the 1990s when banks wanted to have clients banking more in-branch so as to connect.Now they want to save on costs and outsource banking for the general retail segment through ATMs,vending machines,debit cards etc
India's leading telecom brand with presence in Africa-Bharti(cmp 285),looks a buy here as does Tataglobal(higher tea&coffee prices expected this year,CMP 125),Tatamotors-selling the world's most expensive and world's cheapest car(diversity) is buy on every dip.India's largest private sector infra co-Larsen&Toubro has a full order book.
The news that George Soros has sold his satke in Gold Funds may be misleading as in India the desire to own gold and real estate above all others is well known.So in the event of a global decline we might see it go dwon on MCX in an uneven manner.At best it should remain flat as Mr Bernanke and the Fed is again making noises of keeping up the QE.
In effect,keep investing in diversified large caps at every dip in the markets,Nifty might touch 5400-5500 till the political and economic circumstances improve.In a couple of years,the current market price of these scrips may have moved 30%.Not the glamour of making 130% in small caps.As records show just too much obfuscation in the balance sheets of such firms,too much equity holding pledged with NBFCs,too much news and too little substance.
Do not get left holding a KINGFISHER AIRLINES!!

1 comment:

  1. hi, can you make your blog roll background a bit more opaque..its very difficult to read!
    -aparna from linkedIn (aumaparna.com)