Year end update for my India direct equity portfolio. I have not made any new transactions since the last update. Biggest Winners are Mold-Tek Packaging, PI Industries and Varun Beverages, whereas losers are Deepak Nitrite, Vaibhav Global and Kajaria Ceramics. Overall portfolio ended with negative to flat 1 year return against 4% 1 year Nifty return.
Taking cue from the US 2022 horrible bear market I am now convinced that the slim outperformance that I have over 3-5 year nifty returns in my India portfolio will disappear in a couple of months if and when the India market goes through similar long sustained bear market:) Long sustained bear market stinks, that time nothing seems to work for retail buy and hold kind investors like us. Life gets more difficult when both stocks and bonds prices fall in lockstep. That time one’s patience/resolve/conviction gets tested big time. More importantly asset allocation/diversification matters a lot, it determines one’s staying power in market in bad time like this. I pray that the Indian market should not experience it ever:)
I notice that since the US financial crisis the US market consistently outperformed the Indian market by a wide margin till 2021. If this year’s outperformance is any indicator then India should outperform the US market in the next several years to come. In that context I am more bullish on the India smallcap/microcap segment. Since the beginning. US smallcaps consistently outperformed US large cap stocks till US GDP reached approx $15TN. As the economy became more formalized and organized, large caps started outperforming smallcaps in subsequent years. If the US economy is of any guide then I expect a similar story to play out for a young economy like India. Instead of investing directly in small cap companies here I am looking for a good small cap ETF/Index fund (no Mutual fund) to park my surplus money for several years.
Let’s hope that good days for India market continues forever:) Wish everyone a very happy and prosperous new year. Happy investing…
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