• Chetan Jain

Indian Economy: The way forward

Updated: Jul 11



It is believed that the current decade offers best wealth creation opportunities. We will experience in this decade that the Indian economy transitioning from being a $2.5tn+ economy to a $5tn+ economy and to understand its implications and how Big is this opportunity for equity investors, one must check how the stock markets of developed countries created wealth for equity investors during this transition.


The US achieved the target in 10 years, Japan did it in 8 years, while China accomplished the same within 5 years. Let’s also understand, how much time would India take to travel this journey of transitioning to a $5tn economy and then becoming part of world’s top 5 or top 3 economies during this decade.


Indian economy offers many areas of potential growth because of the demographic dividend, low banking penetration, low household leverage and several government initiatives like Aadhaar, GST, RERA, Bank recapitalization, and so on, have paved the way to tap all these areas of growth potential. Then, the Digital revolution is also playing a significant role. It is in fact world’s largest business opportunities with 1.2 billion people on wireless subscriptions and 0.8 billion with broadband subscriptions.


Furthermore, one out of 13 unicorns in the world happen to be from India with the numbers reaching 100+ by 2022. UPI transactions and the number of debit cards issued have also increased by leaps and bounds.


Per capita GDP and the equity markets are bound to grow due to the above factors and the outcome is “a Golden Decade of Growth” in front of us. Also, a value shift in businesses is evident and the drivers of value migration include technology, cost of capital, innovation and lower switching costs among others. This Value Shift is leading to the rise in market share of better run private sectors businesses over the PSUs – especially in the banking, or insurance sector. This provides one of the huge opportunities in this decade to financial & insurance sector going forward. Besides, the on-going urbanization and rising income will provide a massive boost to discretionary spending.


There is an umbilical cord relationship between the price and the earnings of the company. The growth strategy investing has been imbibed from discipline and consistently reaching small milestones. Growth investing entails pricey valuations but high conviction level helps you sail through.


Equity investing isn’t easy!


It is the time to remember that creating wealth from equity investments isn’t as easy as people assume it to be. It generally takes all you’ve got, and some time even more, as every time is the time of new learning. Only those who love the journey, win, as perseverance and conviction matter, at last.

This is only possible if one doesn’t get carried away by losses or fall in price after investment. If what you own is good, it will pay-off; keep the conviction. Finally, if it is difficult for you to see your portfolio value going down, and you’re losing the conviction, don’t self-manage your portfolio and find a good portfolio manager for your portfolio, this will take away your anxiety, bring back your conviction and this is exactly what you pay a portfolio manager for.

The fact that equity investing is not as easy as you have been assuming is true because even popular fund managers in the past have failed many times. How much difficult it is to actually win in the stock market is well understood by the following data.


Out of 543 companies that entered the primary market in the past 10 years till 31.03.2022, the results are as follows:


Losers


  • 62.2% no longer exist: Kwality Ltd., VKS Projects, BS Ltd., Cox & Kings, and so on.

  • Around 15% of stocks are trading below their offer price: Zomato, Car Trade Tech Ltd., HUDCO, Glenmark Life Science, and so on.

  • Prices of 4% have dropped by 50-80%: Paytm (One97 Comm), General Insurance, Inox Wind, Khadim India, and so on.

  • 3% of these stocks have dropped more than 80%: Coffee Day Enterprises, Eros Intl. Media, and so on.

  • 6 stocks turned into penny stocks: Manpasand Beverages, Goenka Diamonds, Ujaas Energy, and so on.


Winners


  • 6% of the companies have risen by 10-50%: SBI Cards & Payments, Just Dial, Sapphire Foods India, and so on.

  • 5% of the companies are up by 50-100%: Route Mobile, Salasar Techno Engineering, CAMS, and so on.

  • 6% are up by 100-300%: Polycab India, Dr. Lal Pathlab, Gland Pharma, and so on.

  • Only 15 stocks are up by more than 300%: Avenue Supermarts, CDSL, Syngene International, Dixon Technologies, Laurus Labs, and so on.


This vast difference between the statistics of companies that made wealth & those that destroyed wealth is carved by years of practise & experience. We are living in a world that is evolving every second and is flooded with information about every topic that one can think of.

However, what needs to be understood is that some of this information and the view around it comes from experts with several years of these experience and study on the subject matter. A lot of investors today self-manage their portfolios or get trapped to good marketers. In most of such cases, results are unfavourable. Only solution is to select good people – be it promotors or portfolio managers because good people care for minority shareholders and good people first care for investors and then for themselves; good people love the journey and not the results coupled with emotions of greed or fear; and such good people are rare. And, this is what data also conveys.


We, at JUST INVEST ONLINE, offer such good investing experience to our clients.


CALL US or EMAIL US so that we can help you with achieving your financial Goal or objectives.


Happy Investing!!!


"IF YOU FAIL TO PLAN, YOU PLAN TO FAIL"


Note: Data has been taken from multiple website..


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