Stars of the Modi Sarkar

It’s been 2 years since Modi Sarkar is in power and the expectations that Modi was to deliver propelled the financial markets to big rally. What began with a lot of euphoria began to weed out as results of companies failed to keep pace. In the 2 year period there were some businesses which did tremendously well on the sales and profits as well as on their stock prices, while there were many laggards which took away investor wealth along with their confidence.

Mid caps were the stars of the rally and there were 17 stocks which zoomed more than 100%. Among them the top 4 were from diverse sectors which had more than 200%. All the 4 were part of our portfolio and we still hold to 3 of them Bajaj Finance, Ashok Leyland and 3M India.

Top4 Gainers.May16

Stocks that gained more than 100% were-

HPCL, Marico, India Bulls Housing, Piramal Enterprises, Torrent Pharma, Berger Paints, Emami etc., and among the 100% gainers too, we had 4 of the stocks in our portfolio.

It was not a rosy period for all the stocks in our market, we did have 20 stocks that fell in value in the last 2 years. Losses were between 5-90%, between them the top 4 losers were the following.

Top Losers may16

None of the above were in our portfolio, having the best performers and not having any of the weak ones in the portfolio is what helped us have phenomenal growth against the broader benchmarks.

In the last 2 years the returns from SENSEX, MIDCAP and Bravisa Temple Tree shows the superior returns we were able to achieve.

BTT with Index May16

“Midcaps have delivered significant returns over the last three-five years compared to large cap funds but you have to be wary that they are more volatile. So you clearly need to have a long-term horizon in terms of investing in some of these funds. So, I will say even 5-7 years might be a short time because you can have cycles in the market where mid-caps might under perform and since they have run up so much, you have to be a little cautious when entering this segment.” – Kaustubh Belapurkar, Director – Manager Research, Morning star India.

Pre-election rally began with the banking stocks in 2014, while surprisingly, apart from Yes Bank, all of the bank stocks 20-73%. In our portfolio, we were totally out of banking exposure since 2013, just before the challenges we faced in the Subba Rao period. After Raghuram Rajan stepped in, our economy went into a dramatic change, while there is still a long way to go before the banking stocks get strength, because there have been so much muck to be cleaned in them, without Raghuram Rajan, it wouldn’t have been possible for sure.

Factors like ease of doing business, Make in India, Roads and Railway infrastructure along with GST will instill very good growth for our economy, selecting the right stocks and being invested in them till they complete their growth phase will give any investor tremendous profit potential on their investments.

India – The world’s investment destination.

SwachhBharath

The other day I was in the Millionaire Mind intensive seminar by Harv Eker. It was a 3 day intensive course on how to become a billionaire by taking away all the blocks in our mind. It was an impressive program. The learning for me was when Harv, told about the potential India has as an investment destination. The following is his words, ‘Your prime minister has been admired by the world, he has been called by other countries to take the opportunity of growth by either participating or investing. Not many leaders get such an opportunity, which means India is the world’s destination for investment. He has already been to the US, UK, recently to Australia and more to come very soon. All his thoughts are positive, I travelled through your country in the past weeks and I could witness people have only positive aspirations. For the next 10-15 years India is the place to make big money, your markets are going to roar. Being here in India, living in India at this part of its great journey, if you are not capitalizing on the potential, God, only God can give you another such opportunity. Take the opportunity, be invested, you will feel proud that you took the right decision when you look back to 2014 from 2019. If you wait for more confirmation, you will only be staring on a lost opportunity.”

Everything said in few minutes, I was very happy listening to this conversation, my judgement too was the same, India will all it glorious development in the next 5 years. Why is it so? What is so euphoric?

One by one if we look at the external situation

There is able administration, who are willing to take fast decisions.

Crude oilCrude Oil is a story that is next to over now, producing countries are no more waiting for their leader to hold production and dictate price, they are scrambling to get their maximum share in whatever they could sell at available price. It has become a buyers’ market, no more a sellers’ market. Something our generation has not experienced so far. No more new high’s possible in crude oil, it has begun the other part of the journey on its bell curve.

Very good rains this year, many of our dams are full. Many governments are planning to construct new dams. So, crops are going to be very good in the coming years.

1 trillion of investments coming into India from the International markets, this will bring many new businesses to India and so much employment opportunity.

Make-In-IndiaLogo650

Make in India, drive is going to add more value to our products and this means higher profits.

Swach Bharath drive is going to make our country crisp and clean, this is a great opportunity. A person wanting to open a window cleaning company can make billions, take our railways for example, it is so dirty that one company can run exclusively to do the cleaning business. As I write this I am travelling in the train from Salem to Bangalore. Like this if we look for cleaning opportunities as a business there are plenty.

More number of businesses and more employment means, people have more money to spend and all that money will circulate into the economy making people more and more rich.

Waking up infrastructure projects will ensure that we have more and better road networks which will make real estate accessible. This should ease out pressure on cities with growing population influx.

Infrastructure growth means big business opportunity for Cement and Steel companies, their businesses are going to soar.

There are a lot more that will be unfolding as days pass by.