The title is not accurate – typically I should have said “Saturday – All In a Day’s Work” as Busybee aka Beheram Contractor would have said.

This crash is different from earlier crashes – I have got far more calls asking “what to buy” far more than “should I sell everything and run”.

Not sure who should get the credit, but I do think that media – which I villify regularly surely should get a lot of credit. I hear Mubina Kapasi, Sumaira Abidi, Surabhi Upadhyay, Anil Singhvi, Kavita Tapliyal – all of them at various times echoing the most sensible advice – stay calm. I also saw videos by Amit Trivedi, Gaurav Mashruwala and independent producers like Swati Kumari saying these things.

I heard Debashis Basu talking of the current situation far more grimly, and as usual with facts – as usual.

I am assuming that people have been watching all this – or at least some of this. I also saw international giants like Morgan Housel talking a lot calmly, and I hope people have heard / read what he says.

Of course I have been screaming – literally on the video – and online that the best thing to do is sit tight.

I have got calls from people asking me “I have x Rs. should I invest..and in which mutual fund or equity shares”. I have had questions from 19 year old to HOLD YOUR BREATH 92 year old asking me “should I put more money to work”. I dare not elaborate on both these people – one fears his parents, one fears his kids!!

I advised people to put money in INDEX funds – especially those who had a longish portfolio and not very well balanced. Of course with people who were already excessively in equity and less in debt, my suggestion was to sit in debt funds – as they were already doing.

Personally I had (luckily, not talent) sold shares of Carborundum Universal, Chola, Eid Parry, Coromandel International, Hdfc bank, ….and a few others. However I have bought them all back inspite of the fact that I do not think that the market at its bottom. Then why did I buy? Simply because i was making decent money, and I seriously do not have the time to monitor. Most bought at lower circuits…and still waiting to buy more. Bought PSU (going against my long term philosophy) – how can you not buy Coal India at 138 – with an imbedded Rs 12 of dividend. How can you not buy Indian Oil at Rs. 80 – with a Rs. 4.25 of imbedded dividend? I thought that this was the nadir. So I bought. I bought Coal India, Ntpc, IOC, Eid Parry, Carborundum Universal.

I am biding my time in BFSI – not sure if even Hdfc bank has hit the nadir. I have sold it at 1200 – an excellent price – but I may buy Hdfc Ltd – where the SOPV sounds better. However I have sold less than 12% of my holding.

So even when I say “I sold” I mean that I sold say 5-10% of the holding in that share. I wish I had sold more Oracle than i did, and I wish I had sold more Hdfc amc.

I am not in a great hurry to buy the BFSI space – even though I am sure that the strong will emerge very strong. I am sure that some of the weak ones will be ripped off the face of earth. I like Indusind bank, I do not like Idfc bank. I have neither in my portfolio, but I would look at Indusind first. Having said that just covering Hdfc bank and Chola sold earlier gives me enough of BFSI. I do think it is over-priced and the new leader will be anybody but not bfsi. My bet is on Pharma, Infra and Psu. I would rather spread my bets – overconfidence in one of the 3 looks illogical.

One word on some favorites like Pidilite, ITC, Hul, LnT, etc.

There is nothing wrong with ITC – look at the ratios – its margins are great. However the margins are in Tobacco not in other businesses. As a capital allocator it allocated max to its worst business. I have dealt with ITC Classic Finance, and I have seen them throw good money after bad money. Personally I did not like a company spreading cancer. Foolish of Lic and Suti to be holding it. They should have done a strategic sale – to BAT or a bunch of strategic investors – like Blackrock, Sequoia, etc. They would have got a lovely price. Instead they chose to sell through ETF – which became an amazing arbitrage opportunity for the trader. The current price is because the price is a victim of this arbitrage. I am not sure whether it will got to its golden era of PE of 70.

What about Pidilite? Good company, good product, good management – however when the family needs money, it will sell family silver. Get it?

HUL – is in a sweet spot. There is no supply – I know people holding 500,000 shares as well as those holding 500 shares. Those who have held it for donkeys years -1977 onwards will just not sell – they love the dividends and the regularity of growth. However if Rs. 50,000 crores goes into Index funding – 5% out of that – Rs. 2500 crores goes into HUL. Now if a share has no supply, but sure demand, no trader will DARE short HUL. This is BAD for HUL. BAd because its price will keep going up – and when for some reason it falls – you can’t keeping growing at 25% and have 40% margins for life!! The rise in HUL will be met by a crushing fall SUDDENLY. So beware.

Ok….one more Saturday…and will come out with one more post…right now, take care.,,,,

  1. Sir, what is your take on this – The markets will continue the downward movement because of couple of reasons and this may not be a V shaped recovery. It may be U. People are just watching sensex scorecard.

    (i) Firstly, The nifty pe is 19 or so only recently, and markets have come back to senses. however, the growth offered is only 5-6% in recent times (going by gdp figures and also the eps growth of the firms specifically). So it has come to sanity levels, but panic hasn’t stopped.
    (ii) The ‘earning capacity’ of firms are hit by Corona temporarily. for eg. if Tirupati shuts darshans, all restaurants, lodges, transportation, unorganized businesses around it take a bad hit. Like wise, trains cancelled, flights grounded, mall closures etc … Extending logic to economic landscape as a whole, the quarterly earnings take a (substantial) hit. Markets direction being slave of EPS direction, it will follow the suite until the force causing the downward movement (Corona, curfew and shut shops) stops.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>