- In this issue
- » Are FIIs bullish on India?
- » Berkshire Hathaway AGM draws 40,000 investors
- » Our View on the HUDCO IPO
- » And more!
It was July 2015. I was in Penang, Malaysia, with my wife and two friends from Estonia. One fine afternoon, we had no excursion planned and plenty of time to kill. We decided to give our European friends a taste of Indian cinema. We headed to a nearby multiplex. And spent the next couple of hours immersed in the epic fantasy film Baahubali: The Beginning.
In the final scene, Kattappa, the royal slave, admits to killing Baahubali. A flashback scene shows Kattappa piercing a sword through Baahubali's back. The movie ends, abruptly, in suspense.
When we came out, this one question troubled us to no end: Why on earth did Kattappa, the most loyal servant, kill Baahubali?
Ever since then, I've been waiting for the second instalment... just to know the secret to this mystery.
Finally, after almost a two-year wait, the mystery was revealed. This time, in Mumbai, with my family, over samosas and coffee.
So, here's the truth...
Kattappa didn't really kill Baahubali...
Authority bias did.
Kattappa is conditioned to blindly, unquestioningly follow the orders of Mahishmati's ruler. So bidding farewell to sense and sanity, Kattappa follows the orders of the high command and kills his beloved Baahubali.
One massive blunder and behold the consequences: the loss of lives and the misery that engulfed the entire kingdom for a quarter century. Couldn't Kattappa have avoided this tragic mistake?
Some basic questioning...some logical thinking...fact-checking...a quick SWOT analysis...and Baahubali could have been saved.
Of courses, movies are movies. Exaggerated and over-dramatised. But the field in which I work - the stock market - has no less drama and masala.
Over the years, I have witnessed hundreds of cases of what I call the 'Kattappa syndrome' - authority bias killing investor portfolios.
I've known people who bought stocks and lost money simply following the so-called experts on television.
I've known friends and relatives who bought stocks and lost money following tips and rumours about the involvement of a big, famous investor.
I've known many, many people who bought stocks and lost money buying fake promises from brokers and promoters (read Reliance Power IPO).
In each of these cases, it's the 'Kattappa syndrome' at work.
Gullible investors following authority blindly and digging holes in their stock portfolios.
Our long-time readers are aware that one of our missions at Equitymaster has been to protect the small investor from the 'Kattappa syndrome'.
Sometime last year, my colleague Rohan Pinto came up with a novel idea.
It was about turning the 'Kattappa syndrome' on its head.
His premise was simple: Instead of falling prey to authority bias, could we take advantage of the ideas and actions of superstar investors, investing gurus, and the smart money?
The answer is a big yes!
For almost a year, Rohan and Kunal have been working passionately on this big project. They've been identifying, studying, and interviewing some of the most astute investing minds in India. And now, they've published their conversations - along with their own detailed notes and takeaways from these rare interviews - in an exclusive ebook titled The Super Investors of India
As I write, more than 12,675 readers have already claimed their free copy of Rohan and Kunal's new ebook. If you are serious about investing in the stock market and you want to turn the 'Kattappa syndrome' on its head, I insist you join them.
Download your free copy of The Super Investors of India now.
| --- Advertisement --- |
12,500+ Copies Downloaded...
The Super Investors of India - our latest special guide, has already been downloaded by more than 12,500 readers...
And that number is going up rapidly as we speak. So, if you still haven't claimed your copy...do not delay.
It's absolutely FREE. Click here to download...
03:40 Chart of the Day
It's no secret that FIIs dominate the Indian markets.
Despite record inflows into mutual funds, it is the foreign investor that drives stock prices.
Keeping this in mind, it always helps to get an idea of FII sentiment.
Today's chart highlights an interesting development. Relative to India's market capitalisation, foreigners are less enthused about India compared to some other emerging market countries.
As per an article in the Business Standard, FII flows in 2017 have been impressive at US$ 6.3 billion. But it is only 0.32% of the market cap of the Indian stock market.
1% is considered a sign of a full-fledged bull market. FII flows were 1.04% of market cap in 2014 when the markets were on a roll after the NDA came to power.
FIIs Not Very Bullish at the Moment
Things have not been great since then. The lack of big bang reforms was one reason why FIIs have been cautious.
However, the biggest reason has been the failure of earnings to catch up with valuations.
So far, the indices have rallied about 12% this year. If FII flows continue at the current pace and the markets absorb the huge flows, it could result in a bubble.
The only way that can be avoided will be due to a pickup in earnings. Our Sensex 40,000 call is based on the same premise.
The biggest event in the world that value investors care about has just concluded. I'm talking about the annual general meeting of Berkshire Hathaway.
Thousands descended on Omaha, Nebraska last weekend to see the grand daddies of value investing in the flesh - Warren Buffett and Charlie Munger.
As Buffett fans know, last year's AGM was streamed live for the first time. The tradition continued this year as well.
In case you missed it, don't worry. Rohan, our in-house Buffett specialist, will have a detailed note for you on Wednesday with all the key takeaways.
Speaking of Rohan, have you downloaded the free report that he and Kunal have put together?
More than 10,000 people have claimed their free copy of The Super Investors of India.
This unique guide is a manifestation of Rohan and Kunal's zeal to teach you the stock picking processes of the finest value investors in India.
Who are India's super investors? How do they pick stocks? Which stocks are they picking now?
How have they been able to make a killing when ordinary investors never seem to make any serious money?
Rohan and Kunal have all the answers...
Claim your free copy now. Click here.
The IPO of HUDCO has opened today. Gain access to our IPO note here. (Subscription required).
The markets have opened marginally higher today with the Sensex trading just below the 30,000 mark, higher by 106 points at the time of writing. Nifty was higher by 39 points. Both the BSE Mid Cap as well as the BSE Small Cap indices were also trading strong, up by 0.6% each. Amongst sectors, banks, and realty stocks were seen attracting maximum buyer interest.
04:55 Today's Investing Mantra
"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble." - Warren Buffett
|DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
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.
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.
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:
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
- 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
- Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
- 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.
- 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.
- Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
- Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
- 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.
- 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.
- 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.
Definitions of Terms Used:
- The Research Analyst has not served as an officer, director or employee of the subject company.
- Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
- Buy recommendation: This means that the subscriber could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
- Hold recommendation: This means that the subscriber could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
- Buy at lower price: This means that the subscriber 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.
- Sell recommendation: This means that the subscriber could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringementDisclosure & Disclaimer:
Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.
This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.
This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, Canada or the European Union countries, the same may be ignored.
This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.
As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use
, available here. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407