Extra TLC for novices …
Sonia Shenoy’s sixth sense alerted her to the fact that the novices at Dalal Street need extra dosage of TLC.
This was actually evident from our haggard faces and bloodshot eyes.
All of our multibagger aspirations have not only evaporated into thin air but most stocks in the portfolios have turned into “multi-beggars”, leaving us in a highly impoverished and pitiable state.
“Of course, his first goal in the World Cup had to be a penalty,” Sonia Shenoy said with her trademark cheerful smile, trying to distract novices from the stock market and get them interested in football.
— Sonia Shenoy (@_soniashenoy) June 15, 2018
The ploy had the desired effect with all and sundry getting into a heated debate with her on the merits and demerits of the penalty goal.
The pains of the stock market became a distant memory in the playful banter.
However, the respite was short-lived.
In the morning, Sonia had to break the news that the markets were in for a rough day.
“Big cracks open up in the asian markets this morning,” she said in a gentle tone.
“Hong kong market now down almost 650 points,” she added, underlining the fact that Dalal Street is not the only one to face the turmoil.
Big cracks open up in the asian markets this morning. Hong kong market now down almost 650 points
— Sonia Shenoy (@_soniashenoy) June 19, 2018
Ayesha Faridi took a cue from this and did her best to soften the blow.
“Asian markets down spooked by Trump,” she said, seeking to pin the blame on Donald Trump and making it look as if the perils are not confined to Dalal Street.
Asian markets down spooked by Trump's latest salvo which takes the trade war between US and China a notch higher. Trump directs US Trade Representative to identify $200 Bn worth of Chinese goods for tariffs..
— Ayesha Faridi (@AyeshaFaridi1) June 19, 2018
NAMO may not come back in 2019 … brace for shock
Basant Maheshwari is not known for his diplomatic skills. He tells things as they are, without any sugar coating.
“Narendra Modi not coming back in 2019 looks quite a likelihood … in case Mamta Banerjee, Chandra Babu Naidu come into power in a coalition government .. there will be very little for anybody to do .. portfolios have to get used to shock,” Basant roared, sending novices scampering like rabbits into their bunkers.
Basant also warned that the stock prices have not yet discounted this dreadful eventuality, implying that stocks can plunge into hitherto unknown levels in the worst case scenario.
@BMTheEquityDesk says Market still not factoring the risk of Modi not coming back, hence prudent to stick with quality stocks to ride out the possible vulnerable phase. Can be in for a mkt-shock if that risk possibility plays out. Need to be with names with sustainable growth
— Ajaya Sharma (@Ajaya_buddy) June 18, 2018
Akash Prakash has warned of an exodus of foreign investors
In April 2018, Akash Prakash of Amansa Capital had also hinted that NAMO’s days are numbered.
“What was seen a sure thing even a few months back, the current regime coming back to power, is now seen as more complex and not straight forward,” he has said.
“At the moment global investors have little faith in any alternative to the current regime,” he added, implying that foreigners would desert India if any junkyard politician came into power.
We need to remove the BJP from power. The economy is in shambles. @NITIAayog numbers are unreal. Farmers are dying and there are no jobs. Environment of hatred is being created and it is dangerous: @SitaramYechury pic.twitter.com/MqN7h5o9VG
— News18 (@CNNnews18) June 18, 2018
BJP's bypoll blues: Advantage united opposition?
Senior journalist @_sabanaqvi to NDTV
— NDTV (@ndtv) June 15, 2018
Money can be made despite the Government
Basant realized that his words may have spooked novices to a point of no return.
“I am not creating a scary scenario,” he said hastily.
“In the past, money has been made by investors despite the Government … People have made money even in coalition governments. So, the Government thing is a temporary phenomenon“, he added in a soothing tone, hinting that NAMO’s absence does not mean that there will be an end to multibaggers.
Buy only high-quality blue-chip mid-cap stocks
At this stage, Nayantara Rai and Karunya Rao rightly asked Basant what stocks should be bought to prepare oneself for the onslaught of the junkyard political parties.
Basant reiterated his pet theme that investors should stay far away from alleged ‘kachra’ and ‘chakri’ stocks.
In fact, Basant has been repeatedly warning us about such stocks though we have so far turned a deaf ear to it.
And chakri and kachra fall the most because they have no earnings back up in a bear market ?. And earnings dry up because of a) Inferior business models b) there is no incentive for the promoter and operator to fudge numbers !
— Basant Maheshwari (@BMTheEquityDesk) June 10, 2018
He also warned that we should stay away from alleged “pied pipers”.
A true indicator of bad market sentiment is when the ‘Pied Pipers of Twitter’ unilaterally decide against sharing their stock picks on a public forum. The heat of the drawdown is just too warm for comfort. #TheThoughtfulInvestor
— Basant Maheshwari (@BMTheEquityDesk) June 19, 2018
Basant advised that we should load our portfolios with stocks which are resilient and would grow despite all challenges of the economy.
He cited the example of private banks and NBFCs as the perfect hiding place because these companies are snatching market share from their PSU counterparts and growing at a scorching pace.
In fact, Basant has earlier formulated the theory that private banks are slated to grow at an eye-popping growth rate of 27% CAGR over the foreseeable future.
Reading between the lines from this @udaykotak interview. A 30:70 ratio between private and public moving to a 50:50 ratio in 5 years assuming a 15% industry credit growth means a 27% CAGR for private financiers. Smaller companies in niche segments can grow faster ! https://t.co/CgZQNlSM6x
— Basant Maheshwari (@BMTheEquityDesk) March 21, 2018
Basant also advised tucking into FMCG stocks which are growing at a scorching pace such as D-Mart.
With regard to his all-time favourite HFC stock, PNB Housing Finance, Basant explained that the desperation of the promoter, PNB, and investor, Carlyle, to divest the stock is paying havoc with sentiments.
— Ashish Verma (@AshVerma111) June 11, 2018
However, these issues become irrelevant in the context of a 5-year holding period, he opined.
However, a further worry plaguing PNB Housing Fin is the fear that its rating may be downgraded as rating agencies are uncomfortable with LAP and developer loan exposures.
— CNBC-TV18 (@CNBCTV18Live) June 19, 2018
— CNBC-TV18 News (@CNBCTV18News) June 19, 2018
Further, Basant expressed a clear allergy to buying large-cap blue-chip stocks.
“Nobody became rich buying blue-chip stocks,” he said in a dismissive tone.
#MarketView | Must buy high quality stocks to survive uncertain poll outcome in 2019; No problem in buying a high quality midcap stock, says Basant Maheshwari of Basant Maheshwari Wealth Advisers LLP in an #Exclusive conversation with @NayantaraRai and @RaoKarunya pic.twitter.com/3Kd4YmV3zF
— ET NOW (@ETNOWlive) June 18, 2018
Other stocks to buy for our portfolios
Amongst other stocks, we can consider BBTC, the stock recently recommended by Sunil Singhania.
BBTC has given a spectacular gain of 15x over the past few years and is still undervalued according to noted experts.
Some other stocks which are said to be undervalued include Summit Securities and Stel Holdings.
Convicing logic has been given by the experts as to why these stocks are a safe buy in the present market conditions.
Raamdeo Agrawal and Shankar Sharma also teamed up to recommend potential 10-bagger stocks at the famous Sohn India conference.
Shyam Sekhar has also recently recommended two high-quality and fail-safe stocks for us to tuck into without any hesitation.
If we had paid attention to Basant’s warnings against ‘kachra’ and ‘chakri’ stocks, we could have saved ourselves a lot of grief. Thankfully, it is still not too late for us to make amends and tuck into high-quality stocks before the onslaught of Mayawati, Mamta and Sonia takes Dalal Street by storm!