September has been a notorious months for the financial markets. It did get a bit turbulent! But the ride got so good later that investors have probably forgotten about the turbulence. Here’s a reminder… NIFTY 50 saw a sharp downturn in the second last week of September. It fell from about 11,600 to about 10,800 in about one week. The US flagship equity index S&P 500 also tumbled in the first 23 days in September. Read: Should you invest in US equity mutual funds? So yes, September wasn’t a quiet month. But things around quickly for global equity markets. NIFTY 50 is at 11,900+ and S&am ..read more

It seems the dust on the newest SEBI guideline on Multicap Funds has settled. This offers a good opportunity to review related incidences and chart out the likely scenarios. In this blog, we’ll see… SEBI’s Multicap Funds guideline and other statements made by SEBI What’s the benchmark index of multicap mutual funds How the fund houses have reacted? What are the likely outcomes? Most importantly, what should mutual fund investors do? SEBI’s Multicap Funds guideline SEBI shocked the fund management, advisor and the investor community with their multicap funds guideline on 11th September. Here ..read more

We have had many such months like August recently. And this means that equity market is likely to catch up with economic reality. The highlight of August was the GDP report of the April-June quarter. The GDP for Q1 of FY21 saw a contraction of 23.9%! In simple words, if India as a country earned Rs. 100 from April 2019 to June 2019, it earned Rs. 76 from April 2020 to June 2020. That’s terrible and unprecedented. Of course, no one was expecting a growth in GDP, but the fall is worse than consensus. Here’s how headline indices fared in the month of August 2020 – As you can see, small and mid c ..read more

Apple and Tesla stock splits came into effect recently. Before we talk about the absurdity before and after the event, let’s do a stock split 101 for newbies! Stock Split 101 If a whole cake that costs Rs. 400 is divided into 4 equal pastries, what should be the cost of each pastry? The cost should be Rs. 100, right? (calculated as 400/4) This is very similar to what happens in the case of stock splits. The company announces the date on the day of stock split. And on the day, the stock splits. When the stock split takes places, the stock price is adjusted accordingly. Let’s take the same cake ..read more

Summary – GDP and Outlook After over 2 months of strict lock-down, India started to slowly unlock from June onwards. Relaxations were introduced gradually. However, things slowed in July as compared to June as rising COVID-19 cases. This forced a lot of places to implement total lock-downs. Manufacturing PMI for July slipped to 46 as compared to 47.2 in June. One step forward, two steps back! Even the services PMI showed only a marginal improvement of 34.2 in July as compared to 33.7 in June. We continue to remain in sharp contraction territory. The PMI numbers are not encouraging. While the ..read more

Are we in a dot.com bubble again? Or is it something else? We’re definitely not in a dot.com bubble again just because tech stocks are rallying. Recall that during the dot.com bubble the mere prospect of internet/technology was being bet upon. Prospect, not earnings. Today, the tech stocks are rallying because this is the only sector that is seeing any earnings growth. We’re talking about Apple, Amazon, Google, Microsoft, Nvidia, Netflix, Tesla and Reliance. These are behemoths, near monopolies in their niches today. They are also the ones generate revenue and earnings growth. So, it is natura ..read more

The stock market movements have become curious these days. Most people wonder if the stock market really reflects the economic reality any more. Mutual fund investors too are confused with the wild movements in stock markets they have observed in the last few months. A number of investors believe that we are in the build up of a 2000 type tech bubble. For people who aren’t aware of the 2000 tech bubble, it was the time when a company would add a ‘.com’ to its name and its stock price and valuation would become 10x if not more! In the late 1990s, the internet was new and investors grossly overe ..read more

The topic of disconnect between the stock markets and real economy is back. And it is back at a time when the disconnect is probably the widest! In the USA, millions have lost livelihoods and covid-19 hasn’t exactly slowed down but guess what? NASDAQ is up on the year and S&P 500 has erased all it’s 2020 losses! Here at home, although the market recovery has been less dramatic. But the disconnect is still observable – new covid-19 cases are peaking every day and the economy hasn’t opened up completely. In the midst of all this, since 23rd March, NIFTY 50 has gained a staggering 32%! You ca ..read more

The discord between equity markets and economy is probably the widest ever. We discuss this disconnect in finer details in The Alpha Investor: May Issue. Read more: The Alpha Investor: May Issue | Cover Story: The Great Disconnect To give you a peek of what you’ll find in there, there is not just one but three disconnects that one can observe today. They are… The disconnect between the stock markets and the real economy (the most obvious one) The disconnect between stocks in emerging and developed markets The disconnect among stocks in different sectors The second disconnect c ..read more

The disconnect between equity markets and economy is probably the widest ever. We discuss this disconnect in greater detail in The Alpha Investor: May Issue. Read more: The Alpha Investor: May Issue | Cover Story: The Great Disconnect To give you a flavour of what you’ll find in there, there is not just one but three disconnects that one can observe today. They are… The disconnect between the stock markets and the real economy (the most obvious one) The disconnect between stocks in emerging and developed markets The disconnect between stocks in different sectors The second disconnect can be ..read more