So, the market is at an all-time high, and we are inches away from Nifty @10,000/- Valuations of mid cap and small cap are so stretched, that some MF like DSP black rock has stopped taking new fund flows.
We at Shikhar capital started getting cautious at 9000/- booked lots of profits in mid and small at 9600 and now sitting idle.Lots of profits were gone into Tata Motors which is muted and Jubilant food works which have rewarded handsomely after Q1 results. And now we remember the following quote by John Keynes
“The market can stay irrational longer than you can stay solvent.”
We seriously believe the market crash could come anytime and may be started from Dow Jones due to FANG stocks. It’s time to be very cautious in mid and small cap stocks. Our advice is to book some profits and keep 20 to 25 % in cash.
In stock market trading only 5% of people make money and they make it from rest 95%. what are the signs which lead us to believe that correction is on the deck
- The IPO mania is in full swing. All the newly listed business are getting a premium of 100% and the bubble is getting bigger and bigger with bigger and bigger IPO‘s coming. In last market the super IPO ‘s were Reliance Power, DLF, Future enterprise limited which in turn lost 90 % of their values when the tide turned.
- The liquidity in the world is so high and inflation so low, sooner or later the QE will be reversed, Liquidity will get sucked up, interest rates will rise and we will be rational.
“Everything is a function of interest rates,” Buffett said. “Interest rates are like gravity.”
Buffett might mean that, as gravity is a constant, interest rates are always affecting different economic sectors. When it comes to the stock market, low-interest rates mean more people are investing. This greater demand for quality stocks pushes values higher, helping investors’ portfolios grow.”
- All news channel have shown like – a) 20 20 Stocks b) Total trade for last 15 Min of trading (Some people have become nuts c) The bullishness of anchors is so high sooner you will see 10,000 t-shirts.
- When everyone is talking about stocks and how much they are earning also, start giving you the stock tips remember the following quote
“WHEN THE SHOESHINE BOYS TALK STOCKS IT WAS A GREAT SELL SIGNAL IN 1929. SO WHAT ARE THE SHOESHINE BOYS TALKING ABOUT NOW?”
But surely if markets are all time high there must is some reasoning. Portfolios are looking good why should we sell??
We see following reasons for stock market rise
- There are great expectations of earning growth (Which are there from last three years). In selected pockets, earnings can come good like the consumer (HUL, Jubilant), Cement (ultra tech, Grasim) etc.
- The liquidity factor. In last quarter FF invested around 3000 crores, MF invested around 9000 crores. Here we have a problem. These 9000 crores come from very new retail participation as SIP , which is leading to this bubble. These SIP’s will continue and in turn, will inflate the bubble more in turn more SIP’s and this will continue till the bubble bursts. We fear this SIP’s are leading to the biggest bubble in Indian stock market history.
So what we at Shikhar Capital doing??
Firstly we are at 20% in cash and why because keep in mind following quotes
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
So we are waiting for the right opportunity, and maybe we have to wait a while longer as now the problem is as in the following quote
“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.”
Everyone is so greedy, you tell the name of stock and next moment it’s up 10 %
So, we are sticking to our guns with concentrating investments with our top picks –
- Tata Motors,
- Jubilant food works ,
- Adlabs ,
- Mandhana Retail
- Jet airways.
And we are most bullish on Tata Motors. With the crisis management they are doing, and with new JLR models and of course the new Velar, the stock is highly undervalued and may be double in the coming years.