Hitesh portfolio

(Rajarshi) #2374

(Hitesh Patel) #2375


I was not fully involved during the 2007-08 bull market but have distinct impressions of the time.

Some of the telltale comparable signs are

Valuations take a backseat in justifying rise in share prices. e.g You brought to notice the valuations of pnbhf. People have now started justifying valuations based on market cap to loan book and any other convenient parameters. Plus a lot of companies want to join the bandwagon of the business of the market leader. We can clearly see everyone and their mother wanting to enter housing finance sector and making lofty projections. In 2007 period it was infrastructure companies where the biggest monitorable was balance sheet strength and nobody focussed on it and instead focussed on order book position to justify valuations.

IPOs are of late making a huge comeback and post listing there are similar huge gains as in the past.

There is a huge gush of liquidity in the markets as it was in the past. So most of the falls are bought into. This time the only thing different is the huge inflows of domestic money. I read in a newspaper a couple of days back that domestic investors pumped in 8000 crores during a month. Now thats a big jump from the routine 4-5000 crores in earlier months. Earlier in bull market preceding 2008, FIIs dictated markets which seems to have changed now.

And something which is worrying me is that a lot of fence sitters who earlier were very averse to investing in stock market are now getting into it quoting the TINA factor. There is no alternative. According to them, FDs dont give much returns (maybe 7%) and attract taxes on interest. Real estate rental yields are also not too enticing. Gold has not gone anywhere since past many years. So they feel equity is the only place to be. There seems to be an inevitability to their investing in equity.

The thing I find different this time is that in pre 2008 bull markets, majority of sectors were participating in the rally which I feel was more broad based. Currently it seems only a few sectors are attracting market attention. On this aspect I feel a lot of fellow investors would have a different take than mine and would also come up with data points and other arguments but I am putting forth my view based on a broad observation of the markets.

Putting in a technical observation I have frequently seen, whenever a stock or an index crosses its all time high there is usually a pop up of atleast 25-30%. In terms of nifty levels of 9000 was a perennial supply point for markets from the time PM Modi won the elections. Once that has been crossed convincingly we could be seeing levels of 11500-12000 (9000 + 30% of 9000 which is 2700). This though is not a statement etched in stone. Markets could reverse much before also.

The euphoria associated with pre 2008 bull market is still not evident in its full glory. I would keenly watch out for that.

And another thing which Lynch mentions about market psychology, lay people (in his anecdote about a fund manager at a party and the crowd behaviour around him and around the dentist at various market times ) have not yet started giving me tips on what to buy.:slight_smile:

And a correction if it follows such a bull market may not always necessarily end in a 2008 kind of situation. It may or may not follow earlier pattern. The more the froth there is the deeper will be the correction.

My stance since past few months has been of cautious optimism. A bull who is scared but not shit scared.:slight_smile:

(Trilok) #2376

Thanks @hitesh2710 bhai for sharing your detailed views on market status

(zulfiqar) #2377

Hitesh sir not related to this thread as u r active on this thread ,I have Hawkins AR, have received it and gone through, the mgr is saying that they renovating plant to improve productivity does this mean they are expecting increase demand scenario, what’s your take on it

(Kumar Saurabh) #2378

Hitesh jee, how beautifully you have explained n compared current situation clearly differentiating small nuiances. Though in mind I ve similar thoughts, hope someday I can communicate with similar clarity and simplicity . Lot to learn from you .One more thing I see, in 2008 , people were willing to pay any price for any business , this time people are willing to pay any price for quality business . So, either a major correction by fall or time based (like what we saw in page industry etc for last 3 years ) may bring sanity to market .

(Kamlesh Patel) #2379

Hiteshbhai, thanks for compare and contrast of current (bull) market with preceding (bull) market and putting it nicely.

(Kamlesh Patel) #2380

One thing I observed is current market is slow or indifferent to factor in negative news and fast to factor in positive news. This is clear sign of bull market. From here, market will move very fast (up/down both ways).

(Nolan) #2381

Dear Hitesh ji, this news item may interest you :slight_smile:

(jshah17umd) #2382

Always great to hear your view on market levels.
As long as US markets are making all time high Indian markets will keep going higher due to liquidity and feel good factor.

The trigger will come from

  1. Geo political reason - north korea or
  2. dissatisfaction with trump government

Just to give example of froth in market
Market cap of Top 5 housing finance companies is 390k cr.
Market cap of top 5 pharma companies is 335k cr.
Tables have turned completely
And as you said valuations don’t make any sense in this phase of market…soon analyst reports would start saying that the stock trades at blah blah PE, FY 21…and justify valuations…
Lets enjoy the party till the music is on :joy::joy:

(sanketkulkarni1987) #2383

Completely agree with the view that Indian markets will not trend downwards till their is some halt in the USA market

(Ketan Mukadam) #2384

Hitesh Sir, thank you for your insight into markets. Good learning!!

As long as US markets are making all time high Indian markets will keep going higher due to liquidity and feel good factor.

(nowin) #2386

Very nicely summed up hitesh ji.

Its indeed tough to find value picks in this type of market. However one rule always helps :- “one can borrow an idea but one cant borrow conviction.” Once we build conviction we need not fear corrections/dips in market.

Talking about market experts , ambit capital released a report about their mistakes and wrong calls.(link :- http://reports.ambitcapital.com/reports/Ambit_AsiaMoney2017_AmbitOurbiggestmistakesoverthepast12months_11Jul2017.pdf )

(Sorry if this is a repeat.)

So thats stock market for you…its unpredictable !

(PRSAUDAG) #2391

Hi Hiteshbhai
Do you still hold Sonata and what are your views on it. Thanks.

(Whipsaw) #2392

Hi Hitesh @hitesh2710 ,

Would like to know your views on Vadivarhe Specialty Chemicals. Its promoter Sunil Pophale has earlier started Fem Care Pharma and sold it Dabur. Now he has started this company and listed in NSE emerge. He is projecting 20-25% growth.


(Hitesh Patel) #2393

@PRSAUDAG, I dont hold sonata now and havent been following it so dont have any views.

@whipsaw, I dont have any idea about vadivarhe chemicals.

(amil) #2394

Hello Hitesh Sir,
A lot of stories are emerging like value unlocking and one among them is Omkar/LASA. i see you had started a thread for the same.
Will like to know your view on Omkar Chem current situation. LASA listing awaited and there is lot of talk about management integrity/intention issues. What is your view on these two cos (omkar n lasa) from 3-5 year investment perspective. Thank you (Disc: Invested in Omkar pre-split)

(Hitesh Patel) #2395


I dont follow Omkar closely but it is headed for demerger. You can have a look at the thread on omkar where there are some very insightful views. I dont have any views or holding in the co.

(maheshkumar) #2396

sir what are ur views in manappuram finance

(Sunil) #2397

Hello Hitesh Bhai,

Would like to learn from you how do you ensure that the topline growth is healthy growth. If company give away product at discount prices to increase sales numbers does that concern you?

(Hitesh Patel) #2398


I like and am invested in Manappuram finance since some time from levels of around 92.

My view is that gold loan is a business which can gain on the back of demonetisation.

As a business they lend to the lowest level of pyramid but still bcos of gold collaterals the risk of asset quality deteriorating remains low. If needed they can auction gold and recover dues.

What I liked about their business was their reduction in tenure of loans. This reduces asset quality risks quite well. They also are trying to reduce their dependence on gold loans by focussing on MFI, affordable housing and other streams of businesses. I think Manappuram and even Muthoot are very well placed to pounce on the affordable housing opportunity. With the kind of growth in the housing loan segment shown in past few quarters by both cos, I wouldnt be surprised if these would end up with a big portfolio of affordable housing loans.

There have been a lot of doubts expressed about the growth prospects of gold loan business. My view is that till now these two companies have weathered the competition very well and have managed to grow barring the couple of years when there were regulatory headwinds.

Valuationwise also bcos of concerns of NPA and tepid growth, these companies had not run up in line with other NBFCs. Maybe its time for gold (loan cos) to glitter. :grinning:

disc: invested in both manappuram and muthoot.