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The Investing Revolution That Started 7,287 Days Ago...

Apr 4, 2016

In this issue:
» The five worst single-day crashes in Sensex history
» Who's right - Ajit or Vivek?
» ...and more!

0.00 Chart of the day

Ankit Shah, Research analyst

22 April 1992.

The peak of the 1991-92 bull rally. The BSE-Sensex hit a new high of 4,467. But what followed next was among the darkest days of the Indian stock markets.

The BSE Sensex crashed 12.8% following the outbreak of the Harshad Mehta scandal. This is the biggest single-day Sensex crash till date.

Over the next one year, the Sensex tumbled over 50%.

The worst crashes in Sensex history

Everyone lost money. The small investors were the worst hit. They lost money very, very heavily. But it wasn't only money that got wiped out.

Investors lost faith in the Indian stock markets.

But as they say, the darkest hour is just before the dawn.

The massive stock market scandal that was built on fraud, manipulation, and dishonesty also sowed the seeds for a counter movement towards trust and transparency.

It began with the birth of the National Stock Exchange of India Ltd (NSE) in November 1992, which commenced operations in 1994. The NSE was set up to bring transparency to the markets. It was the first stock exchange in India to provide a modern, fully automated screen-based electronic trading system. Armed with technology and a vision, the NSE created a level playing field for brokers and investors.

This was a big revolution for the stock markets. Investing in stocks became easy, accessible, and transparent.

But that was just half the battle. There was still a big vacuum that needed to be filled.

How could small investors find credible information about listed Indian companies? How could they have access to honest and unbiased views on investing in the Indian stock markets? How could they be protected from all the false propaganda, noise, and misinformation?

The traditional brokerage setup had failed terribly. And burnt tonnes of investor money. It failed because the interests of brokers conflicted with those of investors.

This called for an independent platform that investors could trust...that could hand-hold investors on their journey of wealth creation...

22 April 1996.

This is how Equitymaster - India's first financial website - was born 20 year ago. The sole mission was to empower the retail investor.

You might not find it shocking now. But back in 1996, this was indeed a preposterous idea. India had just 10,000 VSNL internet connections then. An opportunistic businessman would have shot down such a foolish, unviable idea.

But Equitymaster was never born out of a fancy business plan. The vision was far bigger...and deeper than that. It was an investing movement born out of a deep sense of empathy for the retail investor. It was the next big leap in the revolution towards trust and transparency in the Indian stock markets.

I remember the day I joined Equitymaster.

I was anxious to know about my daily deliveries...responsibilities...and all the nuts and bolts of the job. As I sat with my employers that day, something they said has etched on my mind ever since...

  • If you want to succeed at your job, think about the small investor as your best friend. How would you advise your best friend? That's all that you need to keep asking yourself, and you will succeed. We grow, we make money...if your 'best friend' makes money. Rest all is detail.

True, indeed. This has been the guiding principle for me and all my colleagues at Equitymaster over these years.

I am happy to inform you that on 22 April 2016, we will be celebrating our 20th anniversary.

Today, we have more than 1,764,790 registered members across 72 countries worldwide...who trust our views and opinions on investing in the Indian stock markets.

It is this relationship of trust and transparency with you that makes us what we are today. We are proud to have been the pioneers in this investing revolution, and it has been our privilege to empower investors like you.

This is what Mr Jayant Chakravarty, a reader and subscriber since 2003 has to say about his experience with Equitymaster:

  • My association with Equitymaster began in 2003 when I subscribed to StockSelect for one year. To be honest, I was a bit skeptical initially as my experience with other newsletters dealing with equity investing was not good. However, after going through the first few recommendations and reading Ajit Dayal's view, I could sense this is different! The thoughts were clear and honest.
  • Rest is history. Then I subscribed to MidcapSelect, Hidden Treasure and finally I am now a lifetime member. How I wish I knew about Equitymaster earlier.
  • I have followed Equitymaster's advice and the results have been very good. Even in these volatile times my portfolio is stable and the gains have been healthy.
  • My sincere thanks to Equitymaster for making investing a pleasure
  • Jayant Chakravarty - Equitymaster Reserve Subscriber - Ranchi

As the countdown to our anniversary begins, we would like our readers and subscribers to share their experiences with us. Let us know your comments or share your views in the Equitymaster Club.


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3.00

By the way, we are just a day away from RBI's first bi-monthly monetary policy review meet for the financial year 2016-17. Market participants have been speculating about the quantum of rate cut that RBI Governor Raghuram Rajan may announce.

While the market consensus puts the rate cut number at 25 basis points, Ajit Dayal, in a recent article in The Honest Truth is willing to challenge the consensus. The question he has tossed is - "Could the RBI reduce interest rates by 100 basis points (1%) in the monetary policy meeting to be held on April 5th 2016?" If you want to know more about why he thinks 1% rate cut is possible, visit here.

However, that is just a part of the picture. In a recent article in Vivek Kaul's Diary, Vivek makes a point exactly opposite of what Mr Dayal is making, i.e., RBI should not cut the repo rate by 1%, or at least not all at once. To know more about Vivek's views on interest rates , please click here.

Answer this question now... Who's right - Ajit or Vivek? Vote Here Now!

4.15

A day prior to RBI's monetary policy announcement, Indians markets are trading flat. The BSE Sensex was trading marginally higher by 26 points (0.1%) at the time of writing. While stocks from the IT, telecom and auto sectors were trading firm, those from FMCG, energy and realty sectors were trading weak. Mid cap and small cap indices were trading in positive territory, each higher by about 0.2% and 0.4% respectively.

4:45 Today's investing Mantra

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." - Warren Buffett

This edition of The 5 Minute WrapUp is authored by Ankit Shah (Research Analyst).

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Equitymaster requests your view! Post a comment on "The Investing Revolution That Started 7,287 Days Ago...". Click here!

1 Responses to "The Investing Revolution That Started 7,287 Days Ago..."

Rajesh

Apr 5, 2016

First of all congratulations on 20th anniversary and wishing many more, The idea of having an internet portal to stock market newsletters in 1996 is nothing short of starting a revolution. I can only think "What kind of a vision this guy (Ajit) had". He would have been called a fool if he had failed. But he succeeded in a big way. Nothing short of spectacular. What kind of hard work the initial team would have put in to grow to this level and grow from strength to strength. . I am a subscriber for only a little more than a year and I have been very critical harsh on some of the recommendations. Hoping the research process (esp stock select) will be tightened a little bit more and at the end of the next 2 years I might have a different opinion.

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Equitymaster requests your view! Post a comment on "The Investing Revolution That Started 7,287 Days Ago...". Click here!
DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
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