From The Desk Of Chairman

FROM THE DESK OF A CHAIRMAN           

 

October 11, 2018.

 

Re: Long Term Investment, Short Term Reactions

 

Dear Investors,

 

I am writing this letter at a time when stock-market has seen major corrections. INDEX in September has gone down by about 7% and further gone down by 6% further till this date. Midcap and Small Cap stocks reacted more sharply.

 

This has created havoc amongst the investors. Sky is falling. Let’s all run for shelter. Investors have invested for long term but gets disturbed with short-term falls and loses patience. This is not proper. We have examples of 2008 and 2013 that Markets can recover from usual fall caused for temporary negative factors.

 

Volatility is the nature of stock market. Numbers of factors and sentiments affect the market. Current situation has worsened on account of high prices of crude, fall of Rupees v/s Dollar, problems of IL&FS, US-China trade war etc. But is the picture so bad? I believe that it is not.

 

I would like to take liberty of taking few points from presentation of Mr. Nilesh Shah of Kotak Mutual Fund. These points should help you to make your own assessment of the present situation and prospects.

 

  • Our current GDP and forecast have remained unchanged at 8%.
  • Valuations of stocks were at premium in January 2018. They have corrected and are reasonable now.
  • Figures of demand and consumption give picture of comfort amongst consumers. For example;

o   Collections of movies like Race 3, Sanju etc were at Rs. 1100 crores in Q1, much higher than earlier years.

o   Demand for automobiles higher, Tata Motors 62%, Escorts 39%...

o   Pizza, Burger witnessed growth of more than 30% in Q1.

o   Air Travels – Delhi Airport busier than New York airport.

  • 37000 new hotel rooms added in last 4 years.
  • Income of farmers showing healthy growth.
  • Results of companies in Q1 are better, and even better results expected in Q2.
  • Inflation is low.

 

So everything is not bad. Current situation can prevail for some time and market can correct further. Political events in coming months would also affect sentiments. But strong fundamentals should bring it up again. Our advice as usual is `HOLD, and ADD if possible’. Do not panic and sell.

 

Happy investing through CONCEPT.

 

 

Yours truly,
Hemant Desai
[ Chairman ]

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