Monthly Digest
Take a good, hard look at your portfolio and your own mood & behavior since this bout of volatility began. If you find yourself having doubts about the businesses and stocks you were really excited by till they fell 15%, you have some introspection to do. It is easy to BS yourself that you are…
The RBI in its recent MPC meeting changed stance to neutral in line with the Flexible Inflation Targeting (FIT) framework. While the change of stance and rate action make the most headlines, we find more insights when we go through the Govt statement and the minutes of the meeting that is published after a couple…
The pace of action and volatility in the markets has picked up significantly. It doesn’t look like there will be a dearth of narratives for the next few weeks. Post the rate cut by the US Fed, FPI’s showed glimpses of coming back to India in a big way only for the party to get…
Investors have seen the wind getting taken out of a few themes that were very hot going into the election. Political and policy continuity have played out as expected, but the much expected rally fizzled out post June. Kind of describes most heated up runs in the market, if you’ve seen enough cycles play out…
Global macro rumbles are finally here, though the effect of them on the trajectory of the Indian equity market is still unclear. We are seeing clear divergence on central bank action, for a change the US central bank is now following instead of leading rate action. The RBI is sitting comfortable playing a wait and…
June was a brute of a month on the upside, the average large cap mutual fund delivered of 7% in the period. All words of caution and restraint went for a walk as the market went into a party mode as if the incumbent Govt had come back to power with “400 paar”. Just goes…
The Hungama of the 2024 election is behind us. A lot of time has been spent planning and hedging for this event; now we can get back to the basics and start taking investing decisions. We at Congruence Advisers went into this election having decided to do nothing drastic on the portfolio; the last stock…
We told ourselves this many months ago – no chest thumping about returns when every TDH has delivered 40%+ absolute returns in FY24. We instead want to focus on something that is more relevant to investors after a good year How can one continue to stay ahead of the market; as the nature of the…
Where does the market go from here? That’s the question that everyone wants answers to right now. One of the underrated aspects of investing is that even when there is a bull market underway, investing is never straightforward. There will always be enough voices on both sides; some making the case that the market is…
It is easy to get lost in the din of what is happening in individual stocks and specific portfolios, especially when the going has been good. But every once in a while, it is good to take a step back and see the overall picture. We have a simple rule at work – data first…
This rally has set a scorching pace. Many professional fund managers have a YTD alpha of more than 10% to show for, this is after the BSE 500 itself has delivered ~34% over the period. There are some periods in the market where making money feels easy and linear, this is surely one of those…
We are back to our content publishing schedule after a break of two months. Now that our new site is up and stabilized, our usual content publishing schedule will resume. The benchmark index made a high in September, took a dip and is now back to a new ATH (all time high). It is a…
The return of order book investing Something that was forgotten and given up on more than a decade ago has made a resounding comeback. Not many who are following the tips & gyan channels on social media and telegram would have been around to invest in the 2003-10 era. That was the “build India” era…
New blog posts for the month Uncommon sense in investing & life in general. The odd post may get you riled up, especially if your worldview is different. Do suspend your prior biases and read objectively. Fuckarounditis Staying ahead of the curve Investing is a brutally competitive game. Just that things are a bit more…
Dealing with new market highs Why should one learn “how to deal with new market highs”? Isn’t investing more about dealing with lows well? In theory, investors should be in a happy mood when the market makes new highs. In practice, investors are usually a worried lot when the market starts making new highs. Note…
Working through market pivots It has been a frenetic start to the new FY. The headline NIFTY 50 is hovering around it’s highs while the BSE 500 is up ~10% FYTD. For the first time, we missed sending out the monthly newsletter last month; we just got busy researching new ideas and tweaking the portfolio. …
Reflections on the FY that went by FY23 was a brutal year for many investors and portfolio managers alike. What worked well over the past cycle not only stopped working but also fell the most. Imagine buying the best businesses in India and getting hammered with a -10% return in a financial year. The best…
The other elephant in the room – Fixed Income The other elephant in the room – Fixed Income While equity as an asset class offers a realistic possibility of making 15% p.a. over the long term, there is nothing wrong in playing the cycle well in other asset classes too. There are many periods in…
The valuation smash continues Doesn’t really need an explanation, does it? You’ve seen this in the Q3 earnings, any business that was trading at premium valuation and disappointed on earnings saw a steep sell off. The market today would rather pay 20 PE for a cyclical business that is in a good cycle rather than…
Unlearning the superficial lessons of 2016-21 Big statement right there, calling investing lessons superficial. Not all investing lessons are durable, some are just extrapolations of a medium term trends that are good so long as they last. I made this mistake myself in the 2013-17 small cap run, what worked brilliantly for 5-6 years unraveled…
Of recaps and year end report cards We are going into the home stretch of 2022 folks! Not a bad time for a recap and ponder how you’ve gone about investing over the past 18 months. Why 18 months? Because the market started showing signs of froth from July 2021, the headline index rose from…
This is shaping out to be a brute of an earnings season. Any disappointment in earnings is seeing stock prices go down 5%, even if the YoY PAT growth looks healthy. It looks likely that the market is looking at the immediate future with a lot of nervousness and rightly so. Businesses do not operate…
Happy festivities to you and family! On this auspicious occasion do get started with something that has always been on your wish list, something that is important to you but not urgent. Because that’s the category we tend to ignore until something gives. The data points emerging from the domestic economy have been very encouraging.…
The din of macroeconomic analysis continues to be loud while the Indian equity market appears to have a mind of its own. We’ve said this multiple times in our twitter posts that the headline equity index responds to a delta change in the direction of FPI inflows and not necessarily to the quantum of flows. …
Business outcomes are relatively easier to predict than investing outcomes, most of the time. Quoting from the May newsletter – Urban discretionary consumption stories have bullish commentary with the March revenue exit rate surpassing pre COVID levels. Almost all players here have opened more stores aggressively through Q4. Q1 Results across urban consumer discretionary segments…
Towards the end of CY 2021 many were convinced that inflation was just transitory, they soon pivoted to a narrative that said inflation is here to stay. With the latest developments across commodities and bond yields, the narrative is now changing to that of a short lived recession in the US and of inflation cooling…
Where is the bottom for the headline index? A lot of time goes into answering such largely irrelevant questions during bad market periods. Irrelevant because stock pickers in India largely fish outside of the headline index, those stocks can have cycles of their own which lead or lag the index cycle by many months. This…
We may soon reach a situation where a plain old bank FD might turn out to be the best performing financial instrument for some time. For all the gyan peddled about fixed income investing, the past 6 months have been brutal there too, this is how the rate cycle goes. At the bottom of the…
The market has caught investors unawares again and not for the first time. Investors went into the Oct-Dec quarter fully confident of earnings growth only to see the narrative change drastically due to fears of inflation, war, economic sanctions and further supply chain shocks. During the Jan-Mar quarter investors braced for further downside as Russia…
Reckon it is time to mix things up a little bit. Looking at the same old macro data points time and again doesn’t deliver incremental value, even if a lot is happening in the world. For this month’s edition, we will take a cursory look at the evolution of the consumer discretionary segment over the…
January was an interesting month for the markets We might do well to accept that CY22 will see some or the other macroeconomic headwind make the news regularly. Every month we will have to grapple with some or the other central bank offering their view on inflation and when rate normalization could start. Some more…
Wishing you and your near ones a happy new year! Through Q3 an interesting situation has emerged. As the equity market has taken a breather, valuation comfort has emerged for the first time in a year. Valuation is never just about the current price, it is also about how much growth businesses can see over…
Over the past 6 months or so I have been repeatedly sounding a note of caution on the valuation in specific pockets. On expected lines, it has turned out that way within a reasonable period of time. Though the exuberance appears to have simply moved out of these pockets into a different pocket like IPO…
Wishing you and your near ones a Happy Diwali Don’t chase prices higher. I’ve lost count of the number of times I’ve said this over the past year or so. I do sound like a broken record but that is because you need that discipline to get good investing outcomes. Stock picking reduced to its…
The specter of macro economic risk is starting to raise it’s head again; slowly, but steadily. For the first time since the inflation scare came to the fore, the US Fed is grudgingly acknowledging that it might turn out to be a problem sooner than anticipated. The container shortage across the world continues, the Baltic…
Large caps took centerstage with a furious rally through August; the broader market outperformance that investors had started to take for granted took a much needed breather. When a Bajaj Finance delivers ~40% in a six month period, investors wonder why they should search for the next Bajaj Finance and not just invest in Bajaj…
The month of July went by on expected lines, consolidation and sideway movement in the headline index while the broader market continues to party. In other parts of the world the inflation scare appears to be overdone going by what the US bond market is telling us. The 10 year yield went to 1.65% and…
Investors who invest for the medium to long term should spend the bulk of their time reading and forming views about various businesses and sectors. This holds good across all market periods – good, average and bad. The bulk of my alpha generation over the past decade has happened during periods when the market return…
The disconnect between the economy and the equity market has only grown over past few weeks. It is likely to stay this way for a few reasons. Markets are forward looking, they discount the future while giving enough consideration to the present. Simple concept but tough to implement, especially when you are surrounded by negative…
This version of the monthly digest is delayed but the damn virus eventually managed to break into our household. As I type this out we are recovering from a bout of persistent fever for almost a week, hopefully we’ll be back to normalcy very soon. The second COVID wave has literally knocked the stuffing out…
FY2021, you beauty! Go back to March last year and recollect the investor mood, not many could have foreseen what the next 12 months would bring. Yet here we are, laughing all the way to the bank. Good investors never let a crisis go waste. This is in the very nature of the equity markets,…
After a minor tantrum, the market liked the growth orientation of the Budget and sent stocks into the next orbit. February was a great month for the broader markets with widely acknowledged high quality stocks taking a breather. Just reiterates the message that no single approach is evergreen, investors need to calibrate without going down…
The fickle beast is starting to act up a bit again, this time predictably and for reasons anticipated. Excerpt from the December 2020 monthly digest – Over the past two months more than 1.1 lakh Cr of FII inflows have taken the equity markets higher almost effortlessly, this quantum is ~9% of the equity mutual…
Wish you a happy new year! The liquidity gush of November was followed by another month of strong FII inflows. Over the past two months more than 1.1 lakh Cr of FII inflows have taken the equity markets higher almost effortlessly, this quantum is ~9% of the equity mutual AUM. If and when this trend…
65,000 Cr of FII money does not flow into the domestic equity markets every month, when such quantum of money does flow in, it moves the markets. November 2020 has been one of the best months for the Indian equity markets in recent years. A couple of big global risks have been addressed during the…
