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CAGR Insights – 29 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index29-Sep-2322-Sep-23Change
Nifty 5019,63819,674-0.18%
Nifty 50017,29317,2610.18%
Nifty Midcap 50 11,61211,4951.02%
Nifty Smallcap 10012,74912,4762.18%

Gyaan Ki Baat

Volatility Index (VIX) – This is a real-time market index that represents the market’s expectations as to volatility over the next 30 days. When markets rise or fall dramatically, the VIX rises during this period and falls when the market is less volatile. A rising VIX does not indicate where the market will go. Investors often get confused about the VIX and the market index, the market index provides the direction of the market while the VIX measures volatility in the market.

For example, if the Indian VIX is in the 20s, the Nifty could move up or down 20% from its current level over the next 12 months. This means that if the Nifty is currently at 17,500 and the Indian VIX is at 20, the Nifty could fall as low as 14,000 or as high as 21,000 in the next 12 months.

Chart Ki Baat

Courtesy: PPFAS financial Opportunities forum presentation by Rukun Tarachandani

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Here’s the list of curated readings for you this week:

Personal Finance

  • 24 Things I Believe About Investing –  Here are some things I believe about investing. Read here
  • Zerodha turns 13 – The Bengaluru-based company said it gets a bulk of its revenue from futures and options traders. Talking about the trading activity in F&O, Kamath said the total number of people trading F&O is still not that large in India. Read here.
  • Why does international investing make sense for you? – A domestic-only portfolio hinges on the expectation that the domestic market will do better than global markets, which may be a risky bet. A geographically diversified portfolio enables an investor to participate in regional rallies but, more importantly, helps reduce volatility in the long term. Read here.

Investing

  • Navigating the smallcap landscape – PPFAS – In recent years, the Smallcap sector has garnered significant attention. This presentation employs a data-driven perspective to delve into the Indian smallcap equity market. The presentation aims to determine if there’s a genuine opportunity within this segment and, if so, explore the challenges in capitalizing on that opportunity. Watch here
  • Why Selling is so Hard to Do – What is it that keeps us from selling a stock? Whether it’s gone up or down, many times, what we’re worried about is regret. We’ll feel stupid if the stock goes up afterward. Even worse, the stock we bought instead might go down while the one we sold goes up. Read here.
  • The rise of crazy rich Indians – Marcellus – A new generation of around 200,000 super rich families (or 1 million individuals) are making their spending muscle felt. It behooves us, therefore, to tilt our portfolios away from ‘mass’ and towards ‘class-based consumption. Read here
  • Is it different this time? – Solidarity – It is not different this time, just the behavioural cycle at play in Small caps and select sectors. However, some nuance is required on ascertaining fair value. One should be willing to pay a “small” premium for “certain” companies at present. But for most companies in the market, one should not break valuation discipline and wait out the euphoria. Read here.

Economy

  • India’s inclusion in J.P. Morgan GBI-EM Global index to lead to inflows of at least $18 -22 billion in FY2025, auguring well for G-sec yields and INR. Read more.
  • India is not only growing but it is doing so efficiently – It’s crucial to assess whether the capital injections into the economy are yielding proportionate outcomes. Over the past decade, India has made significant strides in this regard, with the ICOR decreasing from 7.5. In the fiscal year 2022-23, the ICOR reached an impressive low of 2.1, marking a decade-long record. Read here.
  • India has a demographic advantage, but, demographics alone may not become destiny –To live up to its aspirations, India needs a healthy and well-educated workforce. Only then demography become destiny.  Read here.
  • India falls short of FTSE Russell government bond index inclusion – Areas for improvement in the Indian government bond market structure highlighted by international investors remain largely unchanged from the previous March 2023 review,” FTSE said in its annual country classification review. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 22 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index22-Sep-2315-Sep-23Change
Nifty 5019,67420,192-2.56%
Nifty 50017,26117,666-2.29%
Nifty Midcap 50 11,49511,636-1.21%
Nifty Smallcap 10012,47612,794-2.48%

Chart Ki Baat

For the first time ever, the number of folios in small-cap schemes overtook those in similarly managed large- and flexi-cap funds in August

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Gyaan Ki Baat

When evaluating performance track record of funds, it is useful to look at rolling returns and not just trailing returns.
Rolling returns are returns for a particular period calculated on a continuous basis. It is similar to calculating trailing returns every day for a period of time. Taking the average of such returns helps to get a realistic view of fund performance.

Here’s the list of curated readings for you this week:

Personal Finance

  • Small Caps Surpass Large Caps on Folios as Investors Flock to Mutual Funds – For the first time ever, the number of folios in small-cap schemes overtook those in similarly managed large- and flexi-cap funds in August, according to AMFI data. Read here.

  • Why do sports stars go broke? – A common thread connecting tales of millionaire sportspeople going broke is either a lack of financial advice or, worse still, bad advice. Read here

  • What does one need to be a value investor? It is the mindset that Klarman stresses when he speaks to business school students about investing.Read here

  • JPMorgan Sees India Share Sale Boom Reaching $30 Billion in 2024 – India will see at least $30 billion raised annually through primary and secondary share sales in 2024 and in the years to come, as companies and their shareholders are more willing to tap the market for funding, according to JPMorgan Chase & Co.  Read here.

  • Money can bring happiness but it also brings complexity – It is easier to spot other people’s mistakes than your own because we judge others based solely on their actions, but when judging ourselves we have an internal dialogue that justifies our mistakes and bad decisions. Read here.

Investing

  • The Problem of Plenty – Cash flow from operations of listed India Inc have almost gone up by 80% from pre-covid run-rates. Now that companies are generating excess cash flows, will the promoters or management be able to utilize the same judiciously or we will end up squandering this advantage. Read here.

  • Finding which factor strategy suits a particular macro environment or stages of business cycle – Factor strategies have consistently demonstrated long-term outperformance, but in the short term, individual factors tend to exhibit cyclical patterns. Read here.

  • Investors seem to be still underweight EM by any measure based on the size of their economies or markets or earnings or efficient risk allocation methodologies. Read here

  • Sankaran Naren: 11 brilliant lessons learnt over 3 decades – Sankaran Naren is the Executive Director and Chief Investment Officer at ICICI Prudential Mutual Fund, where he oversees assets of around Rs 6 lakh crore. Read here.

  • Almost 30% of BSE 500 companies are reporting year-on-year sales contraction. While the margins have experienced a significant improvement in the past quarter, it is majorly owed to deflation in wholesale price. Read here.

Economy

  • IBC mechanism effective but challenges remain – The overall recovery rate of IBC is stuck at 31.62% till Q1FY24, implying a haircut of approximately 68% for creditors.  Read here.

  • There is no distress, clarifies Finance Ministry on drop in household savings – They added financial assets by a lesser magnitude than in the previous years because they have now started taking loans to buy real assets such as homes. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 15 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index15-Sep-238-Sep-23Change
Nifty 5020,19219,8201.88%
Nifty 50017,66617,4871.02%
Nifty Midcap 50 11,63611,647-0.10%
Nifty Smallcap 10012,79412,812-0.14%

Chart Ki Baat

Cost of veg and non-veg thalis up 24% and 13%, respectively, yoy in August.
Courtesy: CRISIL

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Gyaan Ki Baat

What exactly are LiquidBees? LiquidBees represent an Exchange Traded Fund (ETF) exclusively dedicated to investments in the overnight money market. This offers a remarkably high level of safety but also ensures exceptional liquidity.

Each day, the LiquidBees ETF disburses a dividend based on the interest income it generates, with the specific goal of maintaining its Net Asset Value (NAV) at Rs. 1000. It’s essential to be aware that this dividend distribution is subject to the Dividend Distribution Tax and is automatically reinvested in the form of additional “units.”

This approach offers a convenient means to securely park your funds with your brokerage while also earning interest. Additionally, LiquidBees can be effectively used to support trading margins and is widely recognized as an equivalent to holding cash.

However, it’s worth noting that if your applicable taxable rate falls below 30%, you may find Liquid Mutual Funds to be a more favorable option compared to LiquidBees.

Here’s the list of curated readings for you this week:

Personal Finance

  • Mistakes that compound in market – It’s generally wise investment behavior to ignore short-term performance since long-term returns are the only ones that matter. But at some point you have to benchmark your performance in some way. Read here

  • Investors need to understand the difference in risk avoidance and risk control – In fact, not having any losers isn’t a useful goal. The only sure way to achieve that is by not taking any risk. But, as I said earlier, risk avoidance is likely to result in return avoidance. There’s such a thing as the risk of taking too little risk. Most people understand this intellectually, but human nature makes it hard for many to accept the idea that the willingness to live with some losses is an essential ingredient in investment success. Read here.

  • Citadel’s three-decade run reflects the founder’s convictions about when to take risk – and how to manage it – We’d made a strategic decision that we would rather shrink the firm to a smaller base of longer-term capital – more stable capital – than be at risk of hot money flying out when markets really have a moment of turmoil. Opportunities arise in such moments Read here.

Investing

  • The valuations of most major sectors are trading higher than their long-term average. – So, in the near term, investors should expect the equity returns to be subdued. But, the medium-term and long-term scenario for Indian equities remains positive, boosted by several factors i.e. strong macro fundamentals, strong corporate balance sheets, and peaking of the interest rate cycle.  Read here

  • We are at a dangerous point in the Behavioural Cycle for Small and Micro Caps – Small and Micro Caps have more pronounced cycles due to poor liquidity. Thin trading volumes result in stock prices highly influenced by demand supply mismatches on the way up, and even more brutally on the way down. Hence, Small Caps require very long-term horizons and a huge tolerance for volatility. Read here.

  • The Explosive Ascent of Southern India – Per capita income for seven ‘southern’ states (Tamil Nadu, Telangana, Andhra, Kerala, Karnataka, Goa, and Maharashtra) has grown at an average 10% CAGR between FY14-22. These states, which account for 30% of India’s population and 45% of India’s GDP, now have an average per capita income of ~Rs 2.7 lakhs ($3,300), 50% higher than that of the Rest of India. This will have investment implications. Read here.

Economy

  • Unfair to judge private capex because it’s still at very early stages of recovery: Morgan Stanley – If you see the private sector balance sheets of the corporate sector, corporate debt-to-GDP is at a 16-year low, so balance sheets are in pristine position. Similarly, for the financial sector, banks’ impaired loans are tracking at 11-to-12-year lows. Again, their ability to fund and willingness to lend, is high and those are very important cyclical factors which will help improve this capex trend. Read here.

  • India’s industrial output grew by 5.7 per cent in July from 3.8 percent in June. – IIP exceeded pre-Covid levels by ~8% in July 2023 even as the consumer durables segment lagged Read here.

  • Russia’s exclusion to give India more play in bond index – Odds are shortening that Indian sovereign debt will be included in JP Morgan’s emerging market bond index after this month’s scheduled rebalancing of the gauge seeks to fill the vacuum created by Russia’s exclusion, potentially lowering borrowing costs in the world’s fastest-expanding major economy. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

Posted on

CAGR Insights – 8 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index8-Sep-231-Sep-23Change
Nifty 5019,82019,4351.98%
Nifty 50017,48717,0752.42%
Nifty Midcap 50 11,64711,2613.43%
Nifty Smallcap 10012,81212,3863.44%

Chart Ki Baat

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Bazaar Ki Baat

India Inc. Q1FY24 performance decoded

In the 11th edition of “Bazaar ki baat”, we discuss what moved the market in August, sectoral performance, a review of Q1FY24 earnings, and the significance of the rule of 72 in personal finance.

Watch here.

Here’s the list of curated readings for you this week:

Personal Finance

  • India’s Richest 2023 list – This year’s roster of India’s dollar billionaires is a reaffirmation that the growth story is not ephemeral but perpetual. Mumbai and Delhi together account for ₹41.56 lakh crore (60%) of the Fortune India-Waterfield Advisors listing, followed by Bengaluru, Chennai and Ahmedabad. Interestingly, there are 18 smaller towns and cities that have a dollar billionaire each. Read here

  • What Is UPI ATM? Card-less Cash Withdrawal ATM Unveiled At Global Fintech Fest – The UPI-only ATM significantly enhances customer security by eliminating the need for physical cards. Read here.

  • God’s Own Wealth – In a rare instance, the Tirumala Tirupati Devasthanams (TTD), which runs the temple of Lord Venkateswara at Tirumala (an incarnation of Supreme God Maha Vishnu), disclosed assets in November last year — around ₹2.5 lakh crore in cash and gold deposits in banks, donations from devotees and land and buildings. Read here

  • Sebi keen to introduce fractional ownership in India – The concept is already permitted in the US and many Indian investors have bought fractional shares of popular companies like Apple, Meta and Alphabet Read here.

  • Decoding the SEBI consultation paper on regulating financial influencers – Zerodha – If somebody really knows how to make money, why will they share it with somebody else? it’s logic 101. By definition, almost all of them are either snake oil salesmen or they’re just outright frauds. Read here.

Investing

  • Uday Kotak resigns as Kotak bank MD and CEO 4 months ahead of end of tenure. Pens a heartfelt letter to board. Full text here.

  • Foreigners snap up India stocks while fleeing most EMs in August  – Indian equities stood out in August as foreign investors sold stocks in almost every other Asian emerging market, thanks to the nation’s strong corporate earnings performance and its growing appeal as an alternative to China.  Read here

  • Falling WPI, easing goods CPI and corporate margins – The sustained fall in Wholesale Price inflation in the last few months has resulted in gross margin improvements across corporates. Read here.

  • Car makers eye best-ever festival season with record dispatches – Festival season, which traditionally starts with Onam in Kerala and runs till Diwali, accounts for around 25% of the annual passenger vehicle sales in the country. Read here.

Economy

  • IMD’s rainfall forecast for Sep 2023 implies below normal monsoon at the end of the season – Rainfall was deficient at 64% of LPA in Aug 2023, , sharply weaker than the IMD’s projection of below normal rainfall (<94% of LPA). Watch here.

  • Social welfare spend of states to hit a decadal high this fiscal – Spending on social welfare schemes by the top 11 Indian states1 – accounting for 75-80% of aggregate gross state domestic product (GSDP) – is expected to reach a decadal high of over 1.7% of GSDP, or ~Rs 4 lakh crore, according to the budget estimates (BE) of these states for fiscal 2024. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.