I am holding all my shares and am hopeful they will turn around, as all my companies are well managed, have comfortable debt and are not likely to be disrupted by some other technologies or trend, Vijay Kedia, MD, Kedia Securities, said in an interview to Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) Do you think investors are caught in the dilemma “what is looking cheap is not safe, and what is safe is not cheap”?
A) You are absolutely right. And, the biggest victims are the small and new investors, who have mainly entered the market in the last three to four years. They have never seen such a crisis in their life.
But, this is the reality of the stock market. Remember, my statement: There are four caps—large caps, mid caps, small caps, and the bhangaar (junk) cap.
Almost 90 percent of the stocks come into that last category and unfortunately, 90 percent of the new investors invest in that category, and I feel sad.
However, in such a market, barring five or six stocks, all are down by about 30-50 percent from their last peak but bhangaar caps are down 90 percent and are never going to come back. Their game is over.
Q) The year 2019 could well turn out to be the year of long-term investment. A year in which many multibaggers could be born if someone holds them for a long-term period or maybe less? What are your views?
A) In Hindi they say saawan ke andhe ko hara hi hara dikhta hai. I am that kind of person. I am fully invested. And, honestly speaking, I am sad as all my investments are down, but I am hopeful.
I remind myself of my own quote which says “your investments belong to the market and your profit belongs to you”. I am holding on to all my shares and am hopeful they will turn around, as all my companies are well managed, have comfortable debt and are not likely to be disrupted by some other technologies or trend.
Please remember this has not happened for the first time. The market has always recovered with a big bang after such a crisis. But, timing is still unknown.
The index may fall more or take some more time to recover. But, I don't invest in the index. The first principle of being successful in the stock market is to be optimistic. Better to die in optimism then keep living in fear.
Q) How should investors make a case for investment when everything is falling? What are the factors to be looked at for an informed investment approach?
A) Investments thesis does not change, but it sure can be modified with the changing environment. I am strictly following my own investment philosophy of “SMILE” and I feel it is still relevant.
Q) Foreign institutional investor (FII) sentiment has turned bearish for Indian markets. Data suggests that funds are moving to other emerging markets, where there is no excess tax burden. Do you think the outflows have just started and will only pick up pace?
A) Honestly, none of my investments has even been chosen on the basis of investments by FIIs or DIIs. I least care for them. Having said that, for general market, sentiments about FII flows are very important.
It's an agony that their Rs 1,000 crore of outflow can destroy market cap of one lakh crore out of 2.8 trillion USD market cap. DIIs impact on the stock market is insignificant and very much like a new and novice investor.
Q) What can the government do to improve the sentiment on D-Street?
A) DDT (dividend distribution tax) at the company end and then at the recipient end and then capital gain is a sin. Investors are in a tax bracket of 60-70%.
The government is treating investing as they treat cigarette and alcohol industry. Investing is a difficult business. The stock market is a platform to make easy money in the most difficult way.
Q) July auto sales numbers are not encouraging. Most of the auto names are trading with double digit cuts. Do you think this sector can turn out to be the dark horse?
A) The automobile sector contributes to half of India’s manufacturing GDP. This sector alone provides jobs to three crore people, and one cannot expect a recovery in the Indian economy without this important sector. Timing is known to god.
Q) A recent World Bank report said India had slipped to the seventh slot in the global GDP ranking. Will the government be able to achieve its target of turning India into $5-trillion economy by 2024?
A) Well, even the seventh slot is not bad. A slowdown in some sectors such as consumers and automobile is like turbulence, a temporary problem and can be sorted out.
But, there are structural problems in a few sectors such as real estate and financials. If the government recognises the problem and starts fixing it, then even five trillion is possible. But, you cannot cross the ocean until you have the courage to lose sight of the shore.
Q) At a time when investors are thinking of cancelling SIPs and turning away from equity investment, what is your advice?
A) Sentiment has worsened due to the messages doing the rounds on social media. The other day my driver also asked if I was all right.
One should immediately stop SIPs (systematic investment plans) if one thinks that India is going to become the next Venezuela. However, in that case, your FD (fixed deposit) is also not secure. Have faith in India, and have faith in the government.
Fear has two meanings: forget everything and run away or face everything and rise. Watch my songs on the stock market on YouTube. In my last song, I said, ‘raat ke baad prabhat hai’.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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