Valuations in Indian Markets

The post below has been written by well known and highly respected Pune investor Jiten Parmar.


Many believe Indian markets are expensive. Nifty P/E is 24.

My take on this.

I believe we must consider the following :

1) Equity competes with the following classes for investment – Real Estate, Gold, Debt (FD, bank deposits, debt MF).

Let’s analyze each of this.

Real Estate:

This asset is in a cyclical downturn. Prices have been coming down and I don’t see that changing in the near term. Real Estate as an investment is not at all a paying asset class right now. And I see lower and lower domestic investment inflows in that.

Gold :
Fascination of gold is decreasing by the day among Indians. I definitely see lot less attraction for gold among the young Indians. Gold imports are coming down. And returns are very low, right now.

Debt :
FD rates, return on debt instruments are coming down by the day. 6-7% return barely matches inflation. So in real term you are really not making anything.

This leaves Equity as the only asset class which can give superior returns.

2) Based on above factors, we are seeing record inflows into equity domestically.

More than 5000 Cr per month coming into equities via MF SIPS apart from lumpsum investments.

LIC and other life insurance also invest a sizable amount in equity.

EPFO and NPS equity inflows have also started. These domestic inflows have really helped in stabilizing and supporting the market even in case of FII outflows.

Our dependence on FIIs has definitely come down. I don’t see domestic inflows slowing down, which will keep fueling the equity markets.

3) Fiscal health of government is also much improved. Tax compliance is bound to increase.

Merging of formal and informal economy has been fueled by Demonetization and will further gather pace with impending GST (a game changer reform).

FIIs are looking at India with renewed vigor (Mar 2017 showed record inflows).

With political stability, reform path is clear.

And a sovereign rating upgrade sooner or later is imminent. This can lead to more FII inflows.

4) Economy is bound to improve from here. Earnings are at a low and sooner or later I see them improving. Massive infra push definitely seems like happening. Many initiatives of government will bear fruit sooner or later.

So, in conclusion, I think that Indian markets may remain expensive or in fact become more expensive.

Corrections may come intermittently (and since many have big cash, will be bought into, thus protecting big downfall).

Runway seems clear at least for the next few years as far as equity is concerned.

And the supposedly expensive 24 P/E may be the new normal for sometime to come.



Puneet Khurana: Winning the Loser’s Game

We have a special treat today. Puneet Khurana has shared his deck presented at an Investor’s Meet in Mumbai.

Puneet has headed Research for various hedge funds and is Visiting Faculty at IIT Delhi.

He has a great podcast series where he interviews value investors at his blog  Stoic Investing and  is also active on Twitter

Disclaimer:The stocks discussed here are only for informational purposes and not a recommendation to buy/hold/sell.Kindly consult your investment advisor before investing.

[pdf-embedder url=”” title=”Errors in Investing_ Puneet Khurana”]


Gordon: Investing with the Odds

We have a special treat today. Gordon DSouza has shared his deck presented at the IIF Meet in Mumbai

Disclaimer:The stocks discussed here are only for informational purposes and not a recommendation to buy/hold/sell.Kindly consult your investment advisor before investing.

[gview file=””]


Investment Strategy: GOV Model

We have a special treat today. Naresh Katariya has shared his deck presented at the Ideas 20-20 Conference in Chennai

Naresh is a value investor and can be reached via Twitter or his blog

Disclaimer:The stocks discussed here are only for informational purposes and not a recommendation to buy/hold/sell.Kindly consult your investment advisor before investing.

[gview file=””]




Thematic Investing with smallcase

This guest post is written by Vasanth Kamath of smallcase, a  Bangalore-based fintech startup.He explains his investing thesis and his product offering

What is thematic investing?

Picking individual stocks is very risky for retail investors like you & me, as we might not have full knowledge about the company or access to tools required to analyse a particular stock. Instead of analyzing stocks, thematic investing could work better.

Thematic investing is the most natural way to invest. The process starts with identifying a particular idea or theme which one can relate to.

For example, if petrol prices are going down then investing in auto stocks based on expected increase in automobile demand could be a theme.

Similarly, if one thinks that e-commerce is becoming a big market in India, then investing into e-commerce related logistics companies could be a good theme.

Investing thematically ensures that you understand why you are investing into a set of companies while making sure that your investments are aligned with your beliefs and ideas.

How to invest with smallcase

smallcase is a portfolio of upto 20 stocks representing a theme. Every theme has a rationale attached to it which explains the idea and research behind the theme.

It helps you understand why a particular theme could outperform in future. You can also see how a theme has performed historically through charts.

The platform helps you plot the performance chart of a theme for any specific time period of your choice – 1M, 3M, 6M, 1Y and 2Y.

Here is how the investment process works on the platform

  • Choose :

Explore from our line-up of over 45+ smallcases to find the one you like best. You can select a particular type to see all the thematic portfolios under the same.

For example, Government Reforms type has portfolios like The GST Opportunity, Smart Cities and Rising Rural Demand.

Current trends type has Monsoon Cheer and Banking Privately portfolios.

While browsing through themes, you can also sort and select a theme based on 1year and 1month returns.

  • Buy :

Once you select your smallcase, you can read a detailed rationale and see the stocks covered in the same and the theme’s historical performance. For buying a theme, you just need to specify an amount more than the mentioned minimum investment amount and buy all stocks in it in 2 clicks!

  • Track :

We help you track your investments easily by setting a custom index starting at 100. Say you invest into Monsoon Cheer smallcase which represents companies expected to benefit from a good monsoon, platform creates an index starting from 100 for this investment.

If the index shows a value of 105.5, you immediately know that your investment is up 5.5%. Also, all smallcases are rebalanced on a quarterly balance to ensure they continue reflecting the theme accurately. When there is any change to a smallcase you have bought, you can update your smallcase to the same in 2 clicks.

  • Pay : 

smallcase charges a flat fee of Rs 100 when you buy a smallcase. Irrespective of the amount one invests, we will charge only Rs 100. This turns out to be a one-time fee of 0.2% on an investment of Rs 50,000. This is significantly lower than investing into mutual funds and paying expense ratio of 1-2% every year.

Do visit our website to know more.