RD Invests

We may all recall the episode of Draupadi's Swayamvar in the Mahabharata. The suitors were required to shoot the eye of a rotating fish by looking at its reflection in a pool of water. While most of the suitors saw the fish, the water, and the surroundings, Arjuna saw only the eye of the fish in the reflection. This exceptional focus and determination allowed him to successfully hit the target and win Draupadi’s hand in marriage. But we are here to talk about the Union Budget which got presented yesterday, why bring the Mahabharata into it? Well, read on. Fiscal Discipline: Just like Arjuna's focus was on the eye of the fish, our beloved Finance Minister's focus has always been on Fiscal Discipline. Why is it so important? Well it gives comfort to our lenders that the country is in a strong position to repay its debt. It gives more elbow room to the RBI to cut rates and support growth if and when required. It provides stability to our currency and in many ways promotes trad...

Let's start today's topic with the definition of Event Risk. An event risk is basically the possibility that an unforeseen event will negatively affect a company, industry, or economy, causing a loss to investors or other stakeholders. By this definition, any unknown electoral outcome gets classified as an “event risk” for investors. There is particularly one set of investors in the Indian markets that are petrified of event risks and they are Foreign Institutional Investors or FII’s as we popularly know them. This chickening out before an event risk has been seen time and again in their investing patterns. General elections coming up? Let’s sell. Christmas holidays coming up? Let’s sell. State elections coming up? Let’s sell. Be it war in Europe, tensions in the middle east, slowdown in China or earthquake in Japan, the first reaction of FII’s is to sell Indian stock markets. Irrational as it may sound, salaried fund managers sleeping in the Eastern Daylight Time Zone, mana...

Pay Through Mobile, aka Paytm is to digital payments what Xerox is to photocopiers or what Colgate is to brushing teeth. A stock with an IPO price of over Rs. 2000, listed at 1600, went all the way down to 460, recovered some lost ground from there and then was recently dealt with a body blow by the RBI sending the stock price crashing 40% in just two trading sessions. On 31st of January this year, t he RBI instructed Paytm Payments Bank Ltd, a 49% subsidiary of the listed entity One 97 Communications Ltd, to cease further deposits, credit transactions, and top-ups on customer accounts after February 29, 2024. This move raised grave concerns about the viability of Paytm’s very business model itself. So why did the RBI do this? Is it justified in using such a high handed approach as a regulator? What will be the business impact on Paytm going forward? Can Paytm bounce back from here? More importantly, should one invest in Paytm in this downturn? Let’s answer these questions one at a tim...

2024 has gotten off to a choppy start with the market mood fluctuating between euphoria and panic, almost overnight. What does one do in such a scenario? How does an investor navigate through such choppy waters? Let's step back a little. Central Banks across the world have put a pause to the incessant rate hikes that we witnessed in the post Russia - Ukraine conflict era. The US Fed have also hinted at the possibility of rate cuts happening in the calendar year 2024. Once we have the first rate cut from the US Fed, Central Banks across the world will begin to follow suite.  Applying simple logic and Economics 101, this points towards: 1. Strong US economic output 2. Strong US stock market performance 3. Strong US bond market performance 4. Strong funds flow into the US markets and hence, a stronger US dollar 5. Some capital flows overflowing to stable and promising emerging markets like India Increasing spending power of US based companies along with a stronger dollar against our r...

Dear Investor, With investments, as with life, regret is the one of the most painful emotions to digest and live with. Lets look back at the worst market crashes of our time: The Great Recession of 2008. The Sensex went into a free fall from circa 21,000 levels to about 7000 levels within a matter of months. Immediately next year in 2009, the Sensex was back at around 20,000 levels aided by massive financial stimuli provided globally as well as domestically. For an investor who invested and lost capital in the 2008 crash, the real regret was not losing capital but not having averaged out his investments when the markets gave him the opportunity to do so. Similar regrets have been faced by investors in every market crash, including the 2020 crash driven by the Covid uncertainties. Unlike life, markets do give us a second chance, a third and a fourth one as well. Unfortunately, most fail to grab these chances and continue down the path of mediocre to negative returns. They end up blaming...