The last leg of the journey to 50,000 was pretty fast. How much faster are we going to move after reaching this particular milestone?
It is definitely a wonderful milestone. I used to think that this is more of a symbol. How does any kind of level really matter? But at times like these, making a lot of noise makes sense so that people will become aware of equities. It is sad that despite the kind of wealth creation that has happened in equities, not many people have benefited from it. There has to be greater participation from the people at large in India so that they can benefit from one of the largest passions of capitalism, where you can make your money work for you and gain financial freedom.
What do you feel are going to be some of the key trends in terms of the makeup of the Sensex or the Nifty?
Leaders of every bull market are different and keep changing, there are certain companies which keep on reinventing themselves but apart from that, very few companies last beyond a couple of decades in the top decile. One has to figure out which are the companies that have a business model that can be reinvented, has a culture that can survive the ups and downs and a balance sheet that can survive a downturn. They are gaining market share and are constantly expanding their addressable opportunity.
There are very few companies that do that but even some companies that do not manage to do that can also be very good wealth creators in a transitionary period. Having said that, clearly the new wealth creators are the digital companies. Going forward, that is what the world is heading towards. It is being eaten up by software and that software is being written in India and now there are new business model innovations along digital lines. There are platform companies and they are in a category where they have a winner take it all kind of economics. So, there will be a few large winners even out of India over the next three, four, five years. A lot of these private companies with new age business models will get listed in India. They will look expensive and I do not think they will get much cheaper from where they list.
What does a retail investor have to look forward to going ahead?
The first thing that any retail investor needs to do is make sure they have exposure to the equity market — directly or via mutual funds or PMS. If you do not have the capability to understand the markets or react in an opposite manner to the emotions that the market throws up, then you give it to a professional who can do it for you but having said that, SIPs work very well. SIP flows have been very steady and that takes care of the emotions that the market can bring out in you.
SIPs definitely are one way for retail investors to invest as constant flow of money can keep pouring into the market. It is not a three-year, five-year product. One needs to understand it is a 20-year product and magic can happen over 20 years.When you keep putting small amounts of money over 20 years’ time, it can become a great huge banyan tree which will keep giving fruits for a long period of time.
How has been your journey so far in the stock market?
It has been a topsy-turvy and a wonderful journey. There was a time when everybody was down in the dumps. One particular instance comes to my mind. When in 2004, the NDA-1 government lost and the market was down 20%. That was my first experience of what can happen in the market. And of course it kept on getting repeated a couple of times on the upside as well as on the downside but one cannot forget those times. As Mike Tyson says, everybody has a plan until you get punched in the face. The market keeps punching you time and again and you have to figure out how you are going to handle those punches. But if you can handle those punches and come back, then the market is going to be very rewarding for you.
Did you think that we could reach 50,000, especially in a pandemic year?
No, there is no way I would have thought that we are going to hit 50,000 at the beginning of this year. Yes, there was a strong belief that we are going to do way better than what most people are expecting but the kind of up move has surprised even the most optimistic ones. The good part is that it is not only purely speculative, it is backed by some earnings upgrades and some economic revival so that gives a lot of confidence that there is a floor at some level, we are not going back to the levels that we saw in March.
If the market corrects, invest more. That is the only way to overcome this fear of losing out or fear of correction. You have to spread it out.
What would you tell the retail investors those who have not cherished or enjoyed or even participated in the rally that has played out from the March lows?
The first thing to do is just get some exposure, do not worry about the correction, do not worry about timing the market and have a longer term horizon. If you can think in decades rather than in months or weeks, then you will be way better off. In 1979, Sensex was 100 and it went to 1000 in 11 years, that is 10x move in 11 years. The next 10x move came in 15 years and the next 5x move has only come in about 15 years.
Since 2006 till now, we have moved up 5x. I would believe that the next five years are going to be way better than the last five years in terms of market returns and in terms of economic performance. So do not worry about the correction that is coming. There is no way you can avoid it, the only people who say you can avoid it are fools and liars. It is okay to live through that, if you want the market to reward you with the best, then you have to face it at its worst.
