The past few weeks have been harrowing for novice investors. Stock prices are tumbling like there is no tomorrow and there is talk that the situation will worsen because a 2008-like crises is around the corner. Fortunately, the Gurus are leaving no stone unturned to ensure that novice investors don’t do anything drastic like selling off all their shares.
Madhusudan Kela, Chief Investment Strategist with Reliance Capital, is highly regarded for his clarity of thinking and ability to put issues in their proper perspective.
In his latest interview, Madhusudan Kela straightaway got down to the task of soothing our nerves by confidently asserting that the “Bull market is 100 per cent intact”.
Kela also pointed out that the present correction is not an unexpected event given that there was a build up of huge euphoria and frenzy over the past couple of years. He also explained that the savage fall in crude oil prices had sucked up liquidity amongst the oil producing nations and their sovereign funds had been deprived of funds of nearly $1 trillion which would have otherwise come into the stock markets.
Kela also explained that while the fall in crude oil prices is a long-term positive factor for the consumer countries (such as India), there is no one-to-one co-relation and such imbalances happen in the short-term.
He emphasized that India is one of the biggest beneficiaries of the fall in crude oil prices because a fall of one dollar in the price of crude results in savings of $1 billion for India. So, the steep fall in crude oil prices from $86 to $50 will result in enormous gains for the Indian economy, Kela added.
After a lot more number crunching, Madhusudan Kela advised us “not to be afraid”. He emphasized that the present crises situation is a “fantastic opportunity” for us to buy top-quality stocks though he advised us to buy in a systematic manner and over a period of time because the risk of a further correction cannot be ruled out.
In terms of specific sectors, Madhusudan Kela is gung ho about the banking sector. He explained that bank stocks have taken it on the chin and are down 20% to 30%. However, as banks are the biggest proxy for any economic recovery, they would be the first ones to recover lost ground. He also opined that while banks are prone to problems of NPAs, the fears are “significantly exaggerated”. Even if 25-30 per cent of the book value is shaved off on the ground of NPAs, some banks are still “very compelling opportunities” Kela said.
Kela also offered important advice that we need to change our mindset with regard to equity investing. He pointed out that when we invest in land or gold, we do not have the urge to keep checking whether the prices have moved and are content to stay invested for several years. However, in the case of stocks, we have the irresistible urge to obsess over the stock prices and get worried unnecessarily over the volatility even though the fundamentals of the underlying companies remain unchanged. Kela advised us to invest in stocks with a long-term perspective and promised that if we do so, we could also bask in great riches!
Fall of $1 in crude price translates to 1 billion dollar in savings. Is it per day? So we are capped at. $30 billion in savings assuming crude falls to zero. Now, the loss in business because of the recession which actually caused lesser crude price is no way even near to your $1 billion.
I completely agree over here. This is just a correction in the bull market. The real profit making run is yet to begin. One got to be choosy now and select only good stocks that are hit hard in these bad days. In my blog i have tried to provide few such.
“the fall in crude oil prices is a long-term positive factor for the consumer countries (such as India),”
Who has benefited from fall in crude price? Neither industry not public getting advantages of crude fall in India.
Pls Compare (Prevailing Crude price VS Petrol/Diesel/LPG) with the same five years ago or 3 years ago. People now started to roll their brain well though the Govt is not using brain or might had blocked.
If there is huge revenue from crude fall, Why there is heavy tax impossed for swach bharat mission. I did not see any signs of so called swatch bharat in my surroundings or nearby.
Go to nearest railway station & you will see swacch bharat efforts
Hey Ajayan. Listen up. So you live in an area which is dirty, filthy, and no swatch Bharat has been done. But you have been living happily in this area before with no problem what so ever. So you are basically waiting for someone else to come and clean your filth, but if they don’t then it doesn’t matter because at no time did it occur to you or your neighbors that you need to clean it yourself, because living in such conditions is absolutely fine for you.
Modi is trying to ask people to do their part as well. Don’t throw garbage outside your apartment and then complain why the government is not cleaning it. Becuase let us all be honest. It was only until Modi came into power and started to do good for us that suddenly Indians have standards now. Before when an Italian woman was ruling Indians, everyone had no problem living in those horrible conditions. So let’s not kid ourselves.
oh these modi bhakts.. why should i pay extra cess/tax to keep railway stations clean. wasnt it already part of railway budget? You guys are horrible. Just with hindutva propoganda this guy has got so many dumb followers
I fully agree with you. Bhakts have become blind. Like Kitex during its journey upwards !!
Who knows where all these tax for cleaning is going? May be “Alibaba” bank ? My frind had to pay Rs. 110 extra to renew his two wheeler insurance which has insured value of rs 16000 only. Why dont these phakts compare the fuel and lpg prices with present crude price ? bhakts wont change their mindset. If UPA II was bad NDA is worse than UPA
Pls remember Rajiv had the vision n opened up the economy during mid 80s. Narasimha Rao followed with vigour. Ur RSS n BJP just followed what Congress has laid the path. Pls stop congress bashing for anything n everything.
These guys AND (including some “fancied” new generation fund managers who are so eager to filter out and catch ultra micro cap third quality stocks) praising the “todays mushroom” while stepping on the strong fundation made by ‘congis’ since independance. They got this opportunity today because ‘congis’ had ruled India for long time.
Dear Jason and Siddhant,
Do Railway station is the only crowdy place to be kept cleaned ? Is it the only place you and me should always interact with? It is Ridiculous that we had to pay extra tax for cleaning railway stations??? Is ther any country in this world in your knowledge collecting tax from public for cleaning railway stations? There is already paid comfort stations in rly stations here in india!!!! Apart from that your tax is being used for extra clean?
You can’t even blame me if I say this tax is used for the foreign journey of our PM!!!!!
Nothing has changed yet and when the change will happen ? D not expect much time from general public because public have extra brain than politicians in india. And this “siddhant” (Theory not your name) is shameful.
Where the money collected as increased tax on fuel though the crude price fell drastically had gone so far????
Modi’s gimmick will not last for another term and history will repat always.
Let Modi start to roll his brain before people starts to do that for him
Hi Ajayan,
interesting discussion on swachh Bharat Abhiyan. Yeah, why do we pay extra tax for keeping railway stations clean? Very right.It is the duty of the duty of the station Master to maintain it clean. did you, or, anybody else question them why was it dirty? No. Because we Indians ,by and large ,love to live in filth. Why will a station become filthily dirty? Why the stations, the roads etc. are so clean in many foreign countries? Why ours is so bad? think and you will get the answer. remember, every new effort may need extra resource; and that requires extra manpower and hence extra money. think of the immediate cleaning systems for reserved class railway coaches. With your one SMS, the cleaner comes in your coach within a few minutes and make your coach tidy. A contractor and his men are required to run this service. who will pay for them? This is just an example.
Dear Ashok,
The station may be filthy because of us and by extending it to roads you seem to have been saying roads are bad because we travel on them. That’s miles away from reality. problem is just widespread corruption. And if this government was so incorruptible then it could have cut on the 10 pct commission all take for doing their job and there you have your bigger budget hike of 10pct. surely no need of cess and excise hikes. And as my friends stated india doesn’t live solely on station. Cleaning up will take much more than a photo-op.
One month down the line, on February 27th, an article will appear here……How Madhusudhan Kela got it all Wrong….
The fact is : Nobody knows anything about markers.
Has any mutual fund manager ever said “Don’t buy now – wait a bit You will see much lower prices?”.