Instead, he has become busier than usual, doing his research on a host of stocks in pursuit for the next set of potential winners that the market is going to throw up when the tide turns.
“This is the time to sharpen the axe, work on improving your skill set,” says he. Spending quality time with family comes last in that order for him.
Soumya Malani is one of the youngest investors on Dalal Street, but has already made a name by managing to spot some of the top wealth creators like Avanti Feeds, Minda Industries, Ajanta Pharma and Bharat Rasayan early into their growth phases.
Malani says he has been trying to use his resources to get a measure of the ground impact of the ongoing pain and is using the time to read up and refresh his fundamentals.
“For a full-time investor like me, the only work is to read up as much as I can. Scuttlebutt, too, forms an integral part of my equity research. I am getting in touch with my resources – from a security guard to a labourer, dealer, distributor to driver – just to be aware of the ground reality. I read Atomic Habits by James Clear for a second time,” he told ETMarkets.com.
PM Narendra Modi on March 24 announced a 21-day nationwide lockdown to contain the spread of the coronavirus pandemic.
“I also play board games with my family members. Apart from that, I have been mentoring a few startups and trying to ease the anxiety among them,” says he.
Asked how he looks at the market opportunity after the massive selloff, Malani said: “This is the time to sharpen your axe and strike when the opportunity presents itself.”
Equity benchmarks Sensex and Nifty have crashed over 30 per cent from their all-time highs due to Covid-19 crisis.
He says fortunes are made in market cycles. “Investors made major wealth during the market cycles of 2001-2008 and 2009-2019. We are about to start another such cycle in a few months from now. Once the market bottoms out, there would again be many mega-baggers, which will give returns of 5-10-20-50 times and transform the lives of people who keep a calm head now and sail through this period without panicking,” he said.
Malani calls himself an eternal bull, and continues to accumulate stocks at an extremely slow pace. He prefers to stick with the businesses that he understands to the core.
“I am always a buyer in companies where there is growth or which have a certain metric or pattern that others are lacking. I strongly believe some clusters would always play out no matter how grim the scenario is. I have been slowly accumulating stocks from such clusters,” says he.
Malani started his career as full-time investor in 2012, and this this has been the biggest market crash of his investing career. Earlier, domestic equity market had seen a bigger crisis during the Global Financial Crisis of 2008, when Sensex and Nifty had cracked over 60 per cent each.
“This (Coronavirus) is once-in-a-century kind of Black Swan event. Lots of companies with strong brands, great managements and huge market shares have witnessed heavy selling. In short, the leaders of various segments are quoting at very attractive valuations. This resembles almost like the 2008 scenario, though the reasons are vastly different. The only common thing in hindsight after some months would be the recovery,” he said.
Malani says new sectoral leaders and stocks would emerge after this crisis to lead a new rally in the market. “Now is the time to be relentless in our pursuit of those next big themes,” he said.
The market loves certainty, and even on iota of uncertainty can massacre both stocks and investors. As many as 45 Nifty stocks hit their 52-week low points in March.
Asked if he was seeing any silver lining, Malani said any positive development anywhere regarding coronavirus would again make the fundamentals relevant. “There is certainly a lot of value in this market.”
“The secret of making money from these valuations would be to stick with the leaders and have a time horizon of five years,” he said, adding that market would bottom out way before the coronavirus crisis peaks out.
“That’s a given! Even the slightest good news will take the market into a massive upward frenzy where stocks would travel to upper circuit limits,” he said.
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