Source: Economic Survey of India 2017-18
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Chart: The Modi Effect
Source: Economic Survey of India 2017-18
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Linkfest: January 29,2018
Some stuff I am reading today morning:
Galaxy Surfactants IPO opens today (MC)
Indian Hotels looks to enter branded homes business (Mint)
Shree Cement goes abroad (BS)
Interview with Puneet Dalmia (Quint)
15-15 Perfect ratio (Amit)
My first extended bull market (Quest for Value)
Stock Talk: Nitin Spinners (Dolly)
Cutting losses (TRB)
The best financial move I ever made (FS)
The thin line between bold and reckless (Morgan Housel)
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Weekend Mega Linkfest: January 25, 2018
Some off beat reads for the weekend:
Raising kids in Delhi’s worsening air (New Yorker)
Facebook begins it’s downward spiral (Vanity Fair)
How to win Founders and influence everybody (Wired)
Venezuela’s Most Wanted (NYTimes)
The event that turned Pakistan (Nadeem Paracha)
Is Modi planning an early Lok Sabha elections this year? (Scroll)
The fallen homes of Anantapur (Rural India)
Being Deepika Padukone (Open)
Gainful Pakodas (Media Crooks)
The booming wig trade between India & Africa (Caravan)
Gossip: Sheila Dixit’s autobiography (Gossip Guru)
Tripura’s best kept travel secret (BI)
15 Lessons from the Dalai Lama (Brightside)
Diaries of a Lit Fest Rookie (Arre)
Who said youth is best? (J Mathrubootham)
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Mega Trend: India’s Auto Exports
Source: Morgan Stanley Research
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Small Caps are Cyclical
Sood said expectations of earnings growth is high but many of the small-cap stocks are at the upper end of the valuation band.
“Even if earnings deliver as it is expected in the next couple of years, small stocks may not perform because of the rich valuations,” he said.
The small-cap index comprising 848 stock is trading at a trailing price to earnings ratio of 111 times — its highest ever.
Sood said the crash in the stock market in 2008 had left investors mainly in several small-cap stocks high and dry. “Smallcap stocks are cyclical in nature. For example, it rallied between 2003 and 2007 and then they saw a significant correction. It took almost 10 years for investors to recoup the losses“
We want our investors to be shielded as much as possible. After 2-3 years, we may realise that exiting small caps is a good decision.