News: Beware! A new breed of gamblers has taken over D-Street, warns Vijay Kedia-16/06/2020
Updated On: Jun 16, 2020
Beware! A new breed of gamblers has taken over D-Street, warns Vijay Kedia
Kedia expects Nifty to hover in the 8,000-10,500 range for next six months.
Jim Cramer, the Mad Money face of Wall Street, said this past weekend that the US stock rally was being shaped by amateur investors biting at low dollar stocks, and warned that this rampant speculation is about to end in a big disappointment. Around the same time, Dalal Street veteran Vijay Kedia sounded an alarm that the Indian stock market was getting crowded with get-rich-quick investors, who got birth during the nationwide lockdown. “These new entrants in the market call themselves traders or investors, but I prefer to call them gamblers, who now have the legal rights to bet in the stock market,” Kedia told ETMarkets.com in an interview. Data from Indian depositories showed a major spike in new demat accounts over the past three months, when India shut down factories and businesses and forced its citizenry to stay indoors trying to control the rapid spread of coronavirus pandemic. The Central Depository Services (India) reported nearly 18 lakh new account openings in March, April and May against an aggregate addition of 8.41 lakh accounts during JanuaryFebruary. Kedia says there is a very thin line between a gambler and a futures trader, but refuses to speculate on what awaits them. His advice? “New participants should refrain from trading and start their investment journey with mutual funds, which are managed by professiona fund managers.”
The market veteran, whose buying and selling decisions on Dalal Street are followed keenly by a section of his followers, has been a quiet player in the Covid-hit market, picking up a couple of not-too-popular names like Atul Auto and Ramco Systems even as he sat on a sizeable cash pile. “The Indian equity market is different,” says the seasoned investor. “Recent volatility and experience teach you that the strategy to hold a stock forever does not work in this country due to lack of innovation, corporate governance, world-class quality and branding,” says Kedia, who has spent 31 springs on Dalal Street picking up value stocks and watching the market shift between bull and bear phases. “There are only 10-15 stocks that you can think of holding forever. Therefore, investors should work on their investment strategies from time to time,” Kedia says. At last count, the market veteran held over 1 per cent stake in at least 15 firms, including Innovators Facade, Repro India, Everest Industries, Vaibhav Global, Sudarshan Chemicals, Newland Labs, Yash Pakka and Panasonic Energy, among others. Kedia says a bull market always stays on there even in times of distress. “It is like sunlight on earth. It is always there somewhere. Sometimes it gets visible in the movement of the benchmark equity indices, while in other times it shows up in a particular sector, even when the broader market is falling. Novice investors do not have the skill to identify such trends.” He specifically pointed to the pharma sector, which made plenty of money in a very uncertain and volatile market through the Covid-battered period. “Pharma, telecom and IT should continue to hold up the market this year,” says Kedia. “But uncertainty in the banking and financial space, which has 33 per cent weightage in the benchmark index, will cap the upside.” Kedia expects Nifty to hover in the 8,000-10,500 range for next six months. “We will continue to see negative news from the economy and on the pandemic front over next 6-9 months. This will keep the market sentiment down. We will have clarity over new non-performing assets (NPAs) after the moratorium period ends. This is an important issue to watch out for,” he says. Kedia says while majority of investors say they have accepted the fact that this year is going to be a washout for the economy and corporates, “in reality, they are the ones who are losing patience every time their investment amount has gone down by 1 per cent.” The market veteran says it requires a great amount of courage, patience and conviction to hold stocks and sail against the wind. “The market often plays musical chairs and leaders of a particular bull market become laggards in the next one. You have to sense when the music is going to stop,” says he.
