5 things not commonly known about the NIFTY

Earlier this week, NSE announced effective Sep 29, 4 stocks (ACC, Bank of Baroda, Tata Power, Tata Motors DVR) will be dropped and 3 (Bajaj Finance, Hindustan Petroleum, UPL) will be added to the NIFTY. When analysts talk about the performance of the “Indian Stock Market”, they are typically talking about the NSE NIFTY Index, and the BSE Sensex Index (to a lesser extent). Most investors know the NIFTY consists of 50 stocks (currently 51), of the largest companies by market capitalisation trading on the Indian markets. 5 things not commonly known about the NIFTY: 5. How the NIFTY 50

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The NIFTY in 2016

A little over a year ago, I published predicting Indian stock market returns based on historical analysis of the NIFTY and the CNX500. I did this with tongue firmly in cheek, given the very concept of value investing accepts inherent unpredictability of markets, especially in the short-term (anything less than five years) as laid out in my calm investing principles. “Anyone who says they know where the market will be a week / month / year from now is guessing (or has super powers)…“ Since I am yet to find evidence of my super powers, except for my ability to order the best thing on any restaurant

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What the biggest fall in six years means for Indian stock markets

So this happened this week… A single day fall of almost 6% and an 8.3% fall for the week before a partial recovery. So what does the biggest fall in six years mean for Indian stock markets? TCI is no economist and apart from a word-cloud of “China” “commodities” “yuan devaluation”, I wouldn’t know to explain the sharp fall in global markets last week. Hence a look at more erudite opinions was called for and directly from this Vox article helpfully titled ‘The global stock market crash, explained‘, here are three (unquestioned) reasons for the Aug 24th fall in stock

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Why the Nifty is falling and the futility of forecasts

People in the market aren’t happy. This wasn’t how it was supposed to go. Not after a landmark electoral mandate and all the promises it held. The professionals were unanimous. India was poised for takeoff and so were India’s stock markets… Dec 2014: Nifty to hit 9,500 by end-2015 on capital inflows: Goldman Sachs (link) Nov 2014: UBS sees Nifty at 9,600 by 2015-end (link) Sep 2014: See Nifty at 10,700 by Dec 2015: Bank NIfty to lead: JM Financial (link) But looks like noone told the Nifty. Departing from script, after steadily rising to the cusp of 9,000 at the beginning of March 2015, it

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The case for long term equity investing in three charts

Using Nifty data from 1999 to 2015, here are three charts that make a strong case for long term equity investing in Indian equities. 1. Longer the holding period, higher the aggregate returns Holding stocks for under a year is not very lucrative, and holding for five years lets you almost double your money. Note how holding for another five years after that more than triples your money. All hail the power of compounding 2. Longer the holding period, lower the volatility Chart 1 shows the absolute return which predictably goes up with increasing holding period. However, with increasing holding period, the uncertainty

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4 charts that sum up Indian equity markets in FY2015

India Share Market in FY2015 In FY2015, India share market were propped up by a combination of a decisive political majority, lowering inflation from falling crude prices and persistently low interest rates in the developed world Apart from commodity sectors like Oil & Gas and Metals, all other sectors and sub-indices have provided positive returns this past year However, Earnings growth, the key driver of share prices, has remained elusive as shown by the 20% increase in Nifty PE explaining most of the 24% rise in the index. We’ve seen in a previous post, current PE has some impact on returns A broad-based

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The worst sector for investors

“How to become a millionaire? Make a billion dollars and buy an airline” – Richard Branson (founder: Virgin Airlines) I am not a fan of the sweeping generalization. Be it about gender “Women are not good at math”, profession “Engineers are left-brained and analytical”, geography “People from xyz are hard-working” or sport “South Africa are chokers”. To me, it represents lazy and (usually incorrect) simplification of a complex world, often done because it’s too much hard work to assess each experience. Investing has its fair share of so-called truisms. “Real Estate gives great returns”, “Gold is a sure hedge against inflation”, “Small caps outperform Large caps” and so

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