With an 11 percent return so far in 2019, the Indian market is trading near record high. However, stocks in the portfolio of market veterans such as Rakesh Jhunjhunwala, Dolly Khanna and Ashish Kacholia have mostly given negative returns in the calendar year as of September quarter.
It is only a reflection of their portfolio as we have only considered those stocks where these investors had at least 1 percent stake at the end of September quarter.
About 24 stocks in Jhunjhunwala's 30-stock portfolio, fell as much as 90 percent in 2019. These include DHFL, DB Realty, Autoline Industries, Bilcare, NCC, Edelweiss Financial Services and Karur Vysya Bank.
Note: This is not an exhaustive list of companies in which market veterans hold stakes, but an indicative list of companies in which they have more than 1 percent stake. The list is not meant for buy or sell ideas.
Chennai-based Dolly and Rajiv Khanna, who invest primarily in mid and smallcaps, also saw negative returns in 2019, data from AceEquity showed.
The worst performer in their portfolio was Nocil which plunged 41 percent, followed by Rain Industries (29 percent), and Nilkamal (13 percent).
Ashish Kacholia also saw over 70 percent of his portfolio record negative returns so far in 2019.
Kacholia holds CHD Developers which plunged 84 percent, followed by Mirc Electronics (75 percent), V2 Retail (66 percent), and Hikal (26 percent).
Note: This is not the exhaustive list of companies in which market veterans hold stakes, but an indicative list of companies in which they have more than 1 percent stake. The list is not meant for buy or sell ideas.
What should investors do?
For the last 2 years, small & midcap stocks have not been performing, and most stocks in the portfolio of veteran investors are from the broader market.
Experts do not suggest investors to completely walk the path as taken by veteran players. One probable reason for that is to avoid herd mentality. Also, the risk appetite could be different and so can be the investment horizon.
Risk appetite is the foremost thing that one must calculate before investing in stocks. Risk appetite denotes the magnitude of risk an investor can take based on goals and expected returns.
Another reason which one should take note of is the herd mentality. Stocks in the veteran’s portfolio is public information and investors should avoid basing their investment decision blindly looking at the portfolio.
“This is a fundamental equity investment mistake that can dampen your returns. Investors are often caught in a herd mentality where they end up buying a stock, which everyone is chasing,” Rahul Jain, Head, Personal Wealth Advisory, Edelweiss told Moneycontrol.
“Investment decisions based on this mentality has more to do with the behaviour of peers. However, what’s essential is to be rational and invest in a stock after carefully analysing its fundamentals,” he said.
Investors should not focus too much on timing the market but remain focused on spending time in the market. It is crucial to see long-term returns of a stock and compare it vis-à-vis its peers and benchmark indices.
“Attempts at timing the market can make investors worse off in the long run than riding out the inherent volatility. This is simply because it’s hard to precisely forecast how the market will move in future,” Arun Kumar, Head of Research at FundsIndia.com told Moneycontrol.
“Our analysis of stock market data shows that a significant chunk of investor gains over a long period of time is actually the result of only a handful of highest-return days or as we call them, the best days,” he said.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.