Tuesday, November 25, 2014

Mother of all bull markets is coming, says Sudarshan Sukhani

Winner of Capstocks Young Investor Challenge receives prize 

He was delivering the keynote address at the 25th anniversary celebrations of Capstocks & Securities in Thiruvananthapuram

·         Inaugurating the celebrations, Ms. Chitra Ramakrishna, MD and CEO, National Stock Exchange, asked the people of Kerala to match up their financial literacy with their much-acclaimed general literacy

Thiruvananthapuram: Chitra Ramakrishna, MD and CEO, National Stock Exchange, asked the people of Kerala to match up their financial literacy with their much-acclaimed general literacy. Chitra Ramakrishana, the first woman MD of NSE, was speaking after inaugurating the 25th anniversary celebrations of Capstocks and Securities (India), one of the leading stock broking and financial services houses in South India. “Though there have been general improvements in economic conditions, the average savings of people are still in single digit, which should be raised. It is our aspiration to help more people to partake in the prosperity that is there. One product we want an average investor to look at is exchange traded fund (ETF),” she said.

[It may be explained that ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does. By owning an ETF, one gets the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, one has to pay the same commission to one’s broker that one would pay on any regular order.]

In his keynote address, Sudarshan Sukhani, a prominent share market analyst and well-known TV personality, said that most of the retail investors could stick their investments to 10 or so companies among the Nifty Fifty as they were chosen through various and thorough scrutiny of experienced professionals. Sukhani said that it is enough for the ordinary investors to invest only in best quality stocks. “Do not invest in companies that are listed only in BSE. Go for the ones which are listed both in BSE and NSE. Also, do not invest in mid-cap or small-cap stocks and if at all, restrict it to a maximum of 20% of your investments in stocks. Do not trade in derivatives. Futures are only for professional investors,” he told a packed RDR Auditorium, Thiruvananthapuram. He also said we are about to see a mother of all bull markets.

“In a bull market of say 15 years, there may be 10 to 15 or 20 bull-bear cycles and in a bear cycle, we should always buy. Never challenge the reason of the markets but go with its flow. Also, never base your decisions on news as most news would be late when you get it,” he said. He has also urged to increase one’s allocation of investments in shares up to 50% or more as we are entering into a bull phase.

V. Rajendran, Managing Director, Capstocks, explained the logic behind his oft-quoted predication that BSE index will cross Rs.1 lakh in 2020. “Sensex EPS (combined earnings of 30 companies in the Sensex) has grown 12% to become 1340 in 2013-14 over that of the previous year.  With the stable governance and new scope of economy, a 15% earnings growth in Sensex can be expected during 2014-15. Historically, Indian share markets have traded between a P/E of 13 and 28.  An estimated earnings growth of 15% and the current P/E of 19 will itself take the Sensex to 30,000 by March 2015. The pace of Sensex earnings growth would accelerate further next year and an estimated 20 per cent growth for 2015-16 will take the index earnings to 1,850. This would translate to a Sensex target of around 40,000 by March 2016. If we extend Sensex earnings further with higher growth rates of 25% and a P/E of 21, the Sensex will touch 50,000 by March 2017 and 1,00,000 by March 2020,” he said.

The prizes amounting to Rs.1 lakh to the winners of Young Investors Challenge, a  mock  investment contest organized by Capstocks for the degree and PG students in Kerala and Tamil Nadu have been handed over to  Serin Cyriac, Bhavan’s Royal Institute of Management, Kochi; Dinesh A., Kongu Engineering College, Erode; Bharathan Syam, St. Albert’s College at the function. Dr. K. Ramdas, Head of Radiation Oncology Department, Regional Cancer Center, received a cheque of Rs.5 lakh on behalf of the needy patients in the center. The fund was mobilized by the management, staff, business partners and dealers of Capstocks in connection with their 25th anniversary celebrations.  26 long term investors and three franchisees of Capstocks were also honored in the event. It may be recalled that the company had given away equipment to set up smart classrooms to five needy schools across the state as part of its silver jubilee.

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