Despite significant selling by overseas investors, the markets have sustained and there is now a trickle back flow from the same investors given that the dollar is peaking out and risk on trade picks up again. All this bodes very well for the India market's bright future, says Alok Jain, smallcase manager & Founder, Weekend Investing in an interview with MintGenie. He also talked about new year resolutions for young investors.
When did you start investing or trading in the equity market? What inspired you to enter into equities?
I graduated from IIT in 1991 with an engineering degree and pursued a masters in engineering in the US before I pivoted into finance. As luck would have it, the National Stock Exchange was opening up and they wanted professionally qualified members, so I got together with some investors and opened up one of North India’s first NSE brokerage houses in 1995. I would say my entry to equity happened more due to my desire to return to India and this timely opportunity just happened to come by.
Despite the global equities not performing well, India has managed to outperform the other emerging markets. Your views on it?
In my personal opinion (we do not use opinion in our strategies) India is standing on very solid ground as of now. The market stands at all time highs vs. most markets at 52 wk lows. That itself tells you the strength of the India markets as perceived by the intelligence of the global funds.
Despite significant selling by overseas investors, the markets have sustained and there is now a trickle back flow from the same investors given that the dollar is peaking out and risk on trade picks up again. All this bodes very well for the India market's bright future.
Your favourite sector of the year and what returns have this sector delivered in 2022?
In my personal view PSU banks have delivered the most unexpected move in 2022. This was the dark horse amongst all and it was delivered when nobody was expecting the same. Another sector has been Auto that had been languishing for a while and that too has come back very strongly.
What is the sectoral outlook for next year?
In my personal opinion, once China opens up Metals Commodities and Real Estate should do very well along with Public sector enterprises. Govt is very keen to push through divestment and this can be a great sector to get revalued. We have already seen the impact of opening up of the Defence sector and the same is yet to be seen in various PSUs under divestment.
Which stock has outperformed/underperformed in this sector? / Which stock would you recommend/ do you expect will perform well?
As momentum investors, we really do not favour or forecast sector-based picks since the process of momentum investing auto selects the strongest of all sectors and the periodic rebalance makes sure we stay with the strength in the markets.
Hence staying with the strongest sectors using price action based long term strategies is very essential. Our processes have shown us over long periods that the process of momentum investing is like survival of the fittest and it will keep you out of the harms’ way as long as we do not interfere in this natural selection process.
The more we research and convince yourself about a stock or a sector the more is the exit difficult when it is needed. The idea is to remain aloof and not wedded to the investment idea and let the stock price movement dictate what we keep or eliminate from the portfolio without allowing our own biases to come in the decision making.
What new year resolution should new and young investors adopt to bring investing discipline in themselves?
The best resolution every new and young investor should take is to stop fearing the market. Just start regardless of the market cycle. Make a habit to save money and invest regularly in a vehicle that is self-correcting in nature. That can be an index fund or a portfolio suggested by a professional manager .
It is essential that your investors do not fall into the trap of quick money using intraday trading etc rather use the markets as a means to gradually accumulate wealth while focusing on their own careers or business. The new investors will also do well to remain focussed on the long term when invested in equities and expect good traction in portfolio only over a 5 to 7 year period.
Disclaimer: The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.