5000 Crores lost……..

Among the Big 3 Online merchants, the total loss for 2015 is more than 5000 Crores. Amazon loses 1700 crores from 1000 crores of sales. For every rupee of their income, they are spending ₹1.70, becoming profitable is a distant dream. Close to a billion dollar worth of money splurged by these online businesses on the Indian citizens in anticipation to make a big buck on a later date. It works to about ₹40 per Indian as we have a population of 125 Crores. And this means, each individual in India has profited ₹40 in 2015 just because of the belief & trust the investors worldwide have on the potential of our markets.

With the online market place business expected to grow at an average rate of 5 times the current business in the coming years, at least that is what these companies are projecting to their investors, the magnitude of loss is also going to multiply if not at the current pace, at least to some extent like 3 times. And this means that, the investors in the online businesses are going to throw away about another 3 Plus billion dollars into the Indian markets in the name of capturing market share.

Whether the e-tailers are going to capture market share and are able to make good of their losses, is not known, while in the bargain the Indian population is going to make big gains. Looking to have another ₹100 each as profits through this mad rush is possible in 2016 and it will continue till the deep pockets of venture capital funding gets dried out. Not all of our population will get the benefit, while the users of online market place in India is expected to be 40 Million in 2016 as per a report by NDTV, this 40 million people are going to get a share of the $3 billion loss that is going to happen. And it means a profit of ₹4500 for each user in 2016. There is a good amount of money out there for a grab……. Take advantage, enjoy shopping online.

Beyond the Online market place there are other service providers like OLA, UBER, BIG BASKET, etc., who are investing 100’s of crores to capture your market share and show to their investors which is success according to them. There is big money coming your way while you enjoy the technology that is going to come in as a new experience. Enjoy and earn too……

EPFO rethinks Equity

Employees Provident Fund Organization (EPFO), after a long thought out process, delaying decision for more than 18 months decided to take exposure into the equity markets to its contributors the advantage of Equities. What turned out is history again, the long dilemma in deciding took away the best of opportunities in the markets and just after their decision to pump in ₹6000 crores or 5% of the corpus into equities in the month of June 2015, the markets took a U turn with the China Crisis in August followed by the downward spiral of the Crude Oil markets.

In 6 months from the decision, the EPFO is rethinking its strategy and wants to pull out its investments following losses it has suffered in the markets. While this condition will give wrong signals to the employees whose contributions were the corpus of this organization? That the Equity markets are not a good investment avenue, while it is not the markets whereas the time of the entry which came amidst a lot of fear and attracted what it was feared off.

They had actually planned a regular investment, which in reality is a very good decision, over a period with the might the equity markets have in providing the highest return on investments which no other asset class in the world can match. To give such good returns, it also requires another important factor, which is TIME. If equity investments are approached with a short term view or with a mind-set that we will only make profits, that is not going to happen. It is the volatility that gives this asset the advantage of giving best profits.

Give your investments time of anything between 3-5 years, the risk quotient almost becomes zero and it has a potential to give more than 15% annualised returns, provided the necessary churn is done on the portfolio.

China Ghost haunts again….

Return of the dragon for the markets in beginning of calendar 2016, though not a welcome sign, it was waiting to happen. All the effort that the Chinese government is making to stop the markets from sliding down is becoming counterproductive. Following the market crash in August 2015, they had imposed a ban on selling for large investors for a period of 6 months, which is now coming to a close and in the meantime, they introduced shorter circuits. Circuits are a mechanism to put the market to a halt when it goes out of control in any direction.

This new decision brought more selling pressure and their markets hit downward circuit twice in a week. Overall strength in the Chinese economy is very low, it cannot get revived overnight. Even if they strengthen, there are no chances that it will be the same as it was in the last few years. China story is over now, whereas the tremors that this behemoth economy will bring to the global markets are going to be pretty high. As the Chinese government take the next step to devalue their currency which is expected to be 4-5% from the current levels, it will impact the emerging markets highly.

Export businesses will take a hit and following this event, USD is likely to touch or move past Rupees 71 to a dollar.

As the large cap stocks have taken a bigger and prolong hit, recovery is likely to be in that segment, though it might give significant gains, it will for sure help the SENSEX and the NIFTY give some decent gains in 2016. Mid Cap stocks will take a back seat this year and there are likely to be many exits in our portfolio and to some extent this space will get occupied by Large Cap stocks.

While there are opportunities available always in the markets to grow our savings if we are able to identify good growth companies, which is the stronghold strategy at BTT.