“I’m feeling the goosebumps, and it’s a very happy moment … You can see the energy. It’s beyond words.”
— Shrini Singh as she watched the live broadcast of Indian spacecraft Chandrayaan-3 landing on the lunar surface, making India only the fourth country to achieve this milestone.
Phew, what a year 2023 was !! While I know my job as an Investment Management professional (I honestly struggle with my job title in the wake of regulatory guardrails), demands that I stick to my domain, but humor me a bit. It is after all a year end note 😊. While the India story has been unfolding over the years, 2023 was a year, where it made some strong strides and marched ahead.
It’s always fulfilling to review the year gone by and documenting the fascinating journey of the Indian economy as well as that of ours.
Our last 2 year end newsletters can be read here :
But let’s start with the economy and markets
Indian Economy: the Short- Term
The equity markets went up. I know, I should have used better adjectives, but for me, markets going up isn’t necessarily to be celebrated and vice-versa. If you follow us and our commentary, you know, we believe small and mid-caps are frothy. Forget the main exchanges, the humble SME exchange – which is a platform for SMEs to raise capital (usually Rs 10-30 cr for each company) – has gone bonkers. The total market cap of companies listed on SME exchange (both NSE and BSE have one each) is a mind boggling Rs 2 lakh cr
But as an investor, you ought to love extremes because that’s where the wealth is created. Enter, ‘profit-booking’. We have spoken a great deal about it in our earlier communications and will avoid deep diving into it here. To sum it up, we are reducing our exposure in mid and small cap.
Indian Economy: the Long-term Story
There is absolutely no doubt on the long-term robustness of the Indian economy. If I can use a cricket metaphor, it’s our match to lose from here. I have a feeling, we won’t.
However, the best proxy for the India growth story is the iPhone journey in India. For the last few years, iPhone sales have been growing close to 50 % Y-o-Y. As per estimates, Apple would sell 10 mn iPhones in 2023, making India ( a low income country) the 4th/5th largest market for Iphones.
Belief can move mountains
In the last 5 years, India’s biggest believer has emerged. She is the humble middle-class SIP (Systematic Investment Plan) investor. The channelisation of household savings into capital markets couldn’t find a better champion. From Jan to Nov 2023, (the data for Dec 2023 is still not published), around Rs 3.32 lakh crore got invested into capital markets through SIPs alone. The full year number should be close to Rs 3.5 lakh crore. This for me, represents the confidence of Indians in India, a trait, which was absent for the longest time
Simplicity has triumphed
Above is an investment screenshot from one of our portfolio, the fund is not really that important (it’s a large cap fund). A humble 15 k SIP from mid 2010 till date (Dec 2023) has grown to 72.2 lakhs (as on 31st Dec 2023, the total cost was Rs 24.6 lakhs). Post tax, net of all expenses managed funds haven’t done a terrible job. Is it easy to replicate this? Absolutely not, the global economy has seen a lot of ups and downs during this period and staying on course wasn’t easy at all.
In the world of AIFs, PE funds, unlisted shares, the humble SIP has stood its ground. Bottom line: There is a case for allocating a lion’s share to simplicity in our portfolios.
Art of Tough Convincing: The BuckSpeak Way ( Our recommendations)
While the world loves investments which have done well in the recent past, we explore exactly the opposite. We pick up themes that have been beaten down. Needless to say it has worked well for us (hence the mention 😊). Obviously, the markets behaving the way they have, it is not getting any easier to find such reasonably valued themes. End of 2022, we started talking about Healthcare/pharma and Taiwan funds. Both have done significantly better than the broader market in 2023.
Disclaimer: We don’t add any positions in such strategies, unless and until the portfolio reaches a certain size and vintage.
The road ahead
We hope (because we don’t know), that equity markets cool off. Markets last cooled off in 2022 and was extremely rewarding for our investors. We would love to have another round of dull 12-18 months (or even longer). If you have been with us for less than 2 years*, such a dull period can bother you. Your CAGR might come down quite a bit, but believe me that would be the best thing for your long-term portfolio
*since we aren’t booking any profit from your equity portfolio
The Team Update:
We love sharing our growth journey with you, since you have ‘invested’ with (to be read as ‘in’) us. For me personally, it’s an exciting journey to build a boutique full stack investment management firm out of Hyderabad, catering to clients across the world (every 3rd client of ours is from outside Hyd).
Our team grew this year as we welcomed two young minds into our family. Vivek Rathi joined us in Jan 2023 and Sai Sarvani* in October. If we ask you to invest for the long term, as a firm, we need to walk the talk and investing in a team is our effort in that direction.
Vivek would join the Client Success Team and work alongside Pruthvi. Sarvani has joined the Research & Analysis team, working alongside Sneha. We fiercely value the bandwidth we offer to our clients and the team growth ensures that we maintain a healthy bandwidth.
*Sarvani discovered us online through our blog and got in touch. Even though we didn’t have an immediate opening, we found her strongly aligned to our culture
We are hugely bullish on the financialization of Indian investments and building wealth for our clients’ passionate lives.
For me personally, I loved 2023. Outside of work; sports, movies, music, travel, food, friends and family gave lot of joy. I strongly believe joy is contagious and hence would love to share a few of my highlights from the year.
2023 was the year India hosted the 50 over cricket World Cup. While India didn’t go on to win the finals, the team’s performance leading up to the finals was a delight to watch. Loved reading these two pieces ; one on the team and the other one on Shami, who was an absolute revelation.
Neeraj Chopra, continues to be the greatest current Indian sportsperson and he clinched the Gold in the World Championship. This is his gold winning throw
I am no movie reviewer 🙂 . But there were a couple of movies that I relished this year and my hunch is not many would have discovered them ( I would be happy to be wrong though). My first one is a Hindi movie called ‘ Three of Us’ :
The second one is a beautiful Malayalam movie, directed by inarguably one of the best contemporary movie directors in Indian cinema; Lijo Jose Pellissery and starring the one and only Mammootty
And that’s a wrap to what has been a very long post for the year. Thanks a lot for the patient read.
Once again wishing each one of you and your families a lot of joy, happiness and good health in 2024. I am filled with optimism for the times to come.
Disclaimer : The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.Image has been used only for representational purposes. While lot of care has been taken to validate the data , neither BuckSpeak nor any of its employees should be held responsible for its authenticity. Investments are subject to market risk , please engage with professionals to take better investment decisions.
We like to share links to articles and information which is interesting to us. It is in no way an endorsement by us or by anyone associated with us.