Hi, everyone. Welcome to today’s post. So I’m getting a lot of questions from my investor community that, hey, should we be investing in the US markets right now or should we pick the Indian markets? Where are the opportunities?
Can you help us understand this logic more? For people who are new to my website, my name is Khushal Oza. I learned a lot about finance. Now, approximately for the last 4 years, I’ve been managing a fairly decent-sized portfolio. Now, I understand investing through different, different lenses. I study the macroeconomics. So I’m a macro investor.
So I researched. I went into a deep dive and I researched a lot of data, a lot of points, and there
are five summarized points that I would like to tell you.
- [1]Book some profits in the short term in Indian markets vs US markets: Right now it makes sense
to book some profits in the short term in both markets.
Why? I’ll explain. - [2] There are no bulk buying opportunities: I don’t see any massive bulk buying opportunities in the markets timber three, there are some asymmetric bets. So if your portfolio is not skewed towards these, you could consider it. For example, something like UiPath is bouncing back in the US. It might make sense. Similarly, in India, IT stocks are bouncing back. You have consumer durables which has that haveack, and some of these stocks are picking up. Might make sense.
- [3]Only continue systematic investment plans (SIP): you should continue to do SIP in some bit.
- [4]Diversify in Indian and US Stock Markets: diversify between the Indian and US stock markets. Diversification is the best investing technique that is used to reduce the chances of facing large losses.
Why? Because the nature of both these markets
is going to shift a little bit from this point.
Now, why am I saying it?
So let me deep dive into different macros and 5, and 6 points, and just
say you can get more clarity, and then I’ll come back again to this summary.
{1}Impact of Elections and Interest Rates: one is that see, in India, the election is already over. So election rallies pre-election rallies, and post-election rallies have been absorbed to a very large extent.
This is the first key change that has happened in the Indian market.
Now in the US, this has not happened yet. So this means that there might be a pre-election/post-election rally in the US. So this is point number one,
Additionally, a related point here is that because in India, we have somewhat of a lesser majority with the government, it’s a mixed government, one could argue. There will be a lot more data that will come out.
Therefore, we will expect to see a lot more volatility in the Indian market.
So this was a two-year period, where the interest rates were very much higher.
So the interest rates were jacked up and the market fell how many times? One, two, three, four, five. And there were five instances when the market fell approximately by 10 % or 10 % or more. These are called volatility points or volatile points. And this is what scares a lot of investors. So if you are a retail investor and you
are getting scared by this 10, 10 % fall, you are likely to be exhibited.
According to my understanding, this is likely to be exhibited in the Indian market somewhere compared to the US market right now, if you are keeping a short-term view.
So which That brings us to the first key takeaway, Hey, if in the short term, you are a little bit scared of this volatility, or you require that money in a 2-3 year period, your investing horizon is not there.
Then see, right now, a very good opportunity to book 20% profits in the Indian market and also in the US market.
Now, US, it depends on whether you have more investment in the S&P 500, which is the broad market index for the US, or you have more investment in the Nasdaq.
The primary difference between the S&P 500 and Nasdaq in the US is that Nasdaq is predominantly tech-focused. Almost 25 to 27% of the weight on Nasdaq is of the top five tech companies. With S&P, that is not the case. It’s slightly more broad. So S&P For example, in the last year, you will see that S&P has given 26% run-up.
What about Nifty? How much return has Nifty given? In one year, it has given, again, almost the same run-up. But on a five-year basis, if you see, Nifty has given That’s the possibility which might happen.
This is one.
The second key point is that the interest rate cuts will happen in the US.
This is very, very likely that this might happen in the US, and this will impact the US market directly, and then it will impact the Indian market indirectly.
Now, what is the meaning of that?
But I’ll still try to teach you. See, when the interest rates are cut, the tech companies, benefit a lot.
Now, why am I saying it? Because these companies are already cash-rich. For example, if you look at Amazon’s balance sheet, Meta’s balance sheet, etc.
Then what ends up happening with these tech companies is that in a low interest rate environment, they give massive rallies. This is precisely what happened even in post-2020 when interest rates.
I’m not hand-picking. You take a look at Apple. So this was like 2020.
Here, you see Apple’s rally.
From ’96, it has gone up to ‘207. So very fast rally because one could argue that between the ‘2020 period and the ‘2021 period, the interest rates were cut. And it’s a US stock for both.
I’m not saying Indian stocks do not
I’m going to cover all those points.
Anyways, coming back to the point, the first key takeaway is that in the US, the chances of run-up are slightly higher.
[2]Market volatility:
Point number 2 is that if you look at the markets technically, for example, again, I’m going to start.
For example, if you look This is the market here,
Now, in India, the election rally is done. But this is an important piece of information I want to give out.
[3]Investment Strategies: Point number 3 is that the volatility in the Indian market is likely to be higher.
Why is that? Because see, when the mixed government is there, now mixed government means support,
and all that stuff, the media becomes slightly fairer, I would say. I’m not saying it will become fair, but you know, the points we cover it in the news format.
So we are likely to see a lot more volatility in the Indian market as of now.
This is going to be the case. So in this case, after you figure out your trading/investment strategy, it might make more sense.
In the US, the picture is such that because elections are supposed to happen, there is a little bit of lag left. I don’t think that there will be massive volatility in the election.
There might be a little bit, but not to the extent that the Indian market would exhibit volatility. This is the third key point that I want to make.
[4]Sector-Specific Insights: Now, the fourth key point is, that there should you be bulk buying anything in the US market versus the Indian market. See, that’s a hard thing to understand
because if you get an opportunity like this If you are in that volatile phase, there is a very high certainty that that will happen in Indian markets. Then it makes sense to bulk buy.
I’m mostly going to buy here. I’m not going to continue to do SIP and all that stuff.
I don’t believe too much in that theory. But if you’re not a slightly more advanced, sophisticated investor, then doing SIP or continuing to do SIP makes sense, or you will find it hard. Do continue to do SIPs.
I hope that I’m not confusing you. I hope that this point is clear.
This is slightly advanced. This allows you to make that 2, 3% alpha over the market, and that leads to much faster wealth growth.
[1] I-Tee Stocks (has to do with computers): — – The first technical target is roughly a 7.5% gain on it – I already have T-see-S in my portfolio – Will add some more – I don’t see the point in being too adventurous with this industry, so NOT buying small/mid-sized firms – Only Index and T-see-S
[2] Consumer Durable:- – This has already run up – But, I think there is still a 15-20% technical gain left on Whir-swimming-Pool – I would avoid Volt-ass; massive run-up already – The consumer demand will ease when there is an interest rate cut, and the IR will go down – So makes sense to hold these things till then
[3] Banks: – Still undervalued – If NIFTY has to move any further, these have to move – So if you see NIFTY moving from this points, makes sense to hold banks – There is likely to be fairly big news manipulation (I’m already seeing this) so that people start questioning and cut positions – You just have to be patient here – There is nothing wrong
[4] Pharma is good too – Stocks like SIP-LA (pronounce it, you will know the name) are good. We had already picked it earlier, – It is on an upward trajectory, so makes sense to hold
So this is why I’m going to discuss
advanced strategies I’m discussing with you. Now, in the US, what’s the scene?
Now, if you go and try to pick the most popular US stocks, for example,
Since then, it has given like crazy run-up.
So more than 100% run up it has given.
I’m not booked profits. And here, for example, if you take a look at Apple, the stock has doubled. So the stock has given a very strong rally. Apple’s all-time high, Amazon’s all-time high.
Everywhere, it’s all-time high, so to say. So I don’t think that, again, here is an opportunity to bulk invest.
It makes zero sense to bulk invest.
However, you can continue to do SIPs on this.
Now, why am I proposing SIP on this? Because in the US, interest rates are going to get cut. And again, companies So advanced point, basically in Apple, Amazon, all these companies, these are cash-rich. They are sitting on billions of dollars of cash. What they do is their credit rating is very strong. So they are very safe companies to lend money to. In a low-interest-rate environment, they can avail of cheaper loans.
What do these companies do?
They go and borrow money like crazy. And then they will throw that money on R&D, faster
growth, hiring more people, and all that stuff.
So this stuff happens. Now, interest rates are likely to be cut in the US. So as a result, here, it makes sense that you at least just keep doing this. The bulk buying opportunity is not clear.
There is no point in running after it.
But yes, if you get these stocks at a 5, 7, or 10% discount, it might make sense.
Now, you’ll say, Bulk buy, where can we buy? Very difficult to say, and unless you are a slightly more sophisticated investor, the following point does not apply to you.
[5] Take Asymmetric Bet:
Now consider, for example, UiPath. According to me, it is a good stock. Now, why am I saying that it is a good stock? For example, if you take a look at the
Company’s revenues, and profit, it’s a sensible company. It is a market leader in the specific domain in which it operates.
It will benefit from low interest rates.
I ended up speaking with a lot of people who work in tech. They were able to present a lot of viewpoints. Their viewpoint was, let’s see when it comes to M7 stocks, these are magnificent seven tech companies in the US. What they are focused on is that they are focused on creating ecosystems. And just smaller companies, all these are very, very specific niche tech companies.
For example, just Coinbase is nothing but an underplay of the crypto market.
Now, if the crypto market adoption is going up, then Coinbase as a stock is going to go up. Now, that is very basic, and commonsensical.
Now, similarly, UiPath, what does it do? It uses a technology called Robotic Process Automation. Now, these companies, have a higher chance of pivoting.
They are startup-type companies. They can pivot faster. They can offer or change this particular technology and pivot to something else. Their growth depends literally on survivability. Now, if you are betting on the technology called RPA, you can buy it. Now, if you are betting on a technology called Crypto or Web 3.
then buy something like Coinbase. It makes sense. If these companies survive for 10 years,
then it is almost given that you are going to 5x6x your money.
There is a very high probability of that happening. So these are called asymmetric bets.
These types of bets are more there in the US than in India. So if you want to aggregate these types of asymmetric bets, by default, you will have to go to the US.
There is no other option. Now, in India, what is going to happen? Because now, some of you might be thinking. Then companies like TCS, and Wipro, will also benefit because they make a lot of money from US/European clients.
Most of the money that these companies make, they make from the US and In fact, this is a swing. This is a swing that I completed.
For example, I’m leaning towards I am also looking at Tata Tech.
I am also looking at specific sectors, for example, or specific There are specific themes like data centers in India and companies that address that theme. I’m studying the stocks.
I will let you guys know. So data centers seem like a very prominent
theme in India because it’s a lot of data localization.
So this is one key thing that I’m trying to add to my tech portfolio in India.
I don’t see too many opportunities, but if you guys are seeing anything, do let me know.
I’ll go through the comments. I’ll try to investigate more.
But this is my overarching thesis as of now.
So just to cut a long story short,
Summary
~*Here are five, key takeaways.*~
So Point number 1, the interest rate cuts are likely to benefit the US market more
compared to the Indian market in the short term.
Point number 2, it makes sense to book some profits, at least on Nifty50 or indices in India.
This is something that I was analyzing. So this was the one phase of the small cap.
And accordingly, you can make a play, whether you want to exit some small cap.
Right now, does it make sense to book some profits on the small-cap?
Yes. On a short-term basis, it makes sense.
So that is point number 2.
Point number 3, if you do SIP, then it makes sense to continue to do SIP. I would prefer the Nasdaq over the S&P 500.
Point number 4, you can add some asymmetric bets in the US market, for example, UiPath, and Coinbase, depending on your belief in these themes.
Point number 5, in the Indian tech, I still don’t see massive opportunities, to be honest.
Still, according to me, something like TCS is going to benefit more from an interest rate cut.
They are also pivoting their models and whatnot. So if we find it at a good level, we will buy it.
The final question that I keep on getting, the market is very high.
Should we exit? Should we reenter later?
See, pruning or readjusting your portfolio makes sense. But a net, in my case, for example, let’s say in my For example, 70 % of my net worth, the entire net worth, is in these stock markets.
Now, the market is very high. So I will withdraw almost 60, 70 % of that money right now. No, that does not make any sense because if I’m withdrawing, withdrawing 60, or 70 % of their money, where will I reinvest?
The real estate market is at an all-time high.
Gold is at an all-time high. Bitcoin is at an all-time high. So you invest, you have to reinvest.
By default, in the stock market, and therefore you have to take this risk. Just to prevent yourself from that 10, 10% fall that will happen at some stage. But beyond that, there is no point in cutting positions right now. At least wait for the interest rate cuts That’s what I would say.
If have any questions then let me know comment section.