The founder and CEO of India's one of the biggest and most successful brokerage firms Zerodha, despite having spent about 25 years in the market, says he has no 'clue' about the market trajectory.
While Kamath said he was clueless about the market, he showed faith that the Indian market will likely remain an outperformer.
Nithin Kamath, who founded Zerodha in 2010 to overcome the hurdles he faced during his stint as a trader, wrote in a Twitter thread, "People keep asking about my views on the markets. I've been at it for nearly 25 years and I don't have a clue. I usually say whatever the current trend will continue, as that is most probable. But over the last year, I've been consistent that India will most likely outperform."
Kamath added that by outperforming he does not mean that the market will go up but will not probably fall as much as other markets and if the Indian market does not fall as much, we will probably outperform on the upside.
Why may our market outperform? This is because of negligible leverage in our markets and all the folks waiting to invest in India, said Kamath.
"In bearish times, when buying interest is low, forced liquidation of leveraged positions creates havoc. The down moves are exaggerated, as we have seen in highly leveraged markets like the US or even Crypto in the last 12 months. This also creates spikes on the way up," Kamath explained.
"After all the regulatory changes in the last two years by SEBI that reduced leverage, there hasn't been an instance when our risk team had to square off the positions of a large group of customers due to MTM losses. Also, the most active leveraged trading activity in India has moved to indices which are much less volatile than stocks and hence lesser need to force close positions. No forced square-off = lower volatility = lower exaggerated moves on the downside when markets turn bearish," Kamath said.
Kamath, however, added that if the US market remains in a bearish grip, our domestic market, too, will suffer even though we will be less volatile and continue to outperform on the downside.
Disclaimer: The article is based on a Twitter thread. Views and recommendations are those of the analyst and not of MintGenie.
