“We do not wait for the house to catch fire and then act. Prudence at all times should be the guiding philosophy…”
- RBI Governor Shaktikanta Das, December 2023
Another eventful year has come to an end and at bl.portfolio, it was action-packed, as always, from the word ‘go’. Be it capitalising on market lows following the Silicon Valley Bank crisis or navigating the market highs, the opportunities in fixed income or gold, we were there every week to provide timely and actionable insights.
It gives me immense pride and satisfaction that bl.portfolio is able to provide unbiased views year after year and deliver without fail in our commitment to you, the reader, and no one else. In this business, we are giving you ideas for your hard-earned money. Hence, in a year where there have been plenty of chances to get carried away by the lure of easy money, prudence has been our guiding philosophy when putting out the edition week after week.
Timely PSU calls
There was never a dull moment for the equity markets this year, beginning with Hindenburg’s report on the Adani companies, the adrenaline rush from the US banking crisis reminding us of 2008, the Israel-Hamas conflict, and finally the year ending with FPIs rushing back and pushing indices to fresh peaks. The sheer number of IPOs left us breathless too! In all, during July 2022–June 2023 (our assessment period every year), we gave 33 buy/subscribe calls of which 21 (63 per cent) have delivered market-beating returns. 60-70 per cent of our 41 ‘accumulate’ calls have also outperformed the Nifty 50/Nifty 500 in this period.
Our big hits are buy/accumulate calls on railway, defence and other PSU stocks where we spotted opportunities early enough — Ircon (up 210 per cent), RVNL (up 164 per cent), Mazagon Dock (up 204 per cent), HAL (up 102 per cent) and Engineers India (up 92 per cent), followed by NTPC, Power Grid and Coal India. However, prudence took precedence over greed when we revisited these calls later in 2023 to check for signs of overheating. While we did reiterate our call on stocks such as NTPC and Coal India, we recently recommended booking profits in RVNL and Mazagon Docks (September 2023) as well as Engineers India (December 2023). MCX and NMDC were other winning calls that at least doubled.
Taking cognizance of expanding valuations and deciding to err on the side of caution, we gave 13 book profit/sell calls in the June 2022–July 2023 period of which 6 have rightly underperformed the markets since then. Calls on Siemens, ABB, Nykaa, Lal Path Labs, Paradeep Phosphates, ACC worked. What did not work were calls on the mid-cap IT stocks – KPIT Technologies, Sonata Software and L&T Technology Services, with IT stocks getting a new lease of life every time hopes of a US recession fades. Our conviction, though, remains.
Our stock-picking capabilities on the international front were well-validated when we doubled down on our positive view on Meta Platforms with a buy recommendation in November 2022, precisely at a time when Wall Street gave up on the stock and there were numerous downgrades and the stock plunged to its lowest levels since 2016. Since then, it is up by nearly 300 per cent in 14 months.
After our positive call on Netflix in 2022 returned 100 per cent in 2023, we recommended that investors book profits, though the stock has further moved up after that. However, we are comfortable sticking to our doctrine of holding stocks with adequate margins of safety and expect our calls to play out. Same is the case with our call recommending investors to book profits in June in Mirae Asset NYSE FANG+ ETF after it returned 57 per cent within 6 months of our recommending a buy.
Though plenty of IPOs have given bumper gains in the short term this year, we thought twice before recommending many of them for investors. When small-caps have been all the rage this year, we wrote in our Big Story section on ‘How to pick small-cap stocks’ as early as March 2023 and then again, on ‘How to win with small-cap funds’ in July. We also had a ‘book profits’ call on a small-cap fund.
Similarly, on the mutual funds side, the NFO fever has been on for almost the whole year. With our web analytics showing us that there is as much interest investing in NFOs as IPOs, we analysed NFOs and pointed out opportunities in existing funds that have a track record, wherever it was necessary. Our secondary market calls on funds were a judicious mix of index funds (to capitalise whenever markets corrected), large-cap, large & mid-cap, flexi-cap, equity savings, balanced advantage and hybrid funds to ensure that investors didn’t overload on the high-risk segments.
Low risk, high yield debt calls
RBI’s rate pause, the tax axe on debt funds as well as the spiking of US bond yields made sure that debt investing remained in the spotlight alongside equities. To ensure robust asset allocation (given the mad rush to invest in stocks), positive real returns at a time when inflation was elevated as well as tax efficiency, we went all out on the debt side. The biggest advantage this year was that we didn’t have to go down the credit rating scale to recommend high-yield products for investors. G-Secs, Post office schemes, SDLs (State Development Loans), FDs of small finance banks and AAA/ AA+ rated NBFCs, corporate bond funds, AAA or AA+ rated NCDs and tax-free bonds were all there to be lapped up and were well covered, week after week.
Even as removal of indexation benefits for debt funds came as a shocker in March 2023, we had already been recommending target maturity funds when yields were at elevated levels in the second half of 2022. We also gave one last bunch of TMFs to invest in before the April 1 deadline for the tax change, to lock into higher yields, with the tax sop.
Prudence was again in our minds when our ‘Diwali special’ Big Story focused on four categories of hybrid funds (which invest in debt alongside equities) — conservative, hybrid, balanced advantage and multi-asset allocation funds, rather than Muhurat stock picks, which is what investors usually look for.
Tech calls, gold
Bl.portfolio has a very strong two-men in-house technical analysis team, who deliver like clockwork not only on deadlines but also on the targets they give. In our technical outlook for the market for 2023, we had rightly indicated that the Nifty would have a maximum downside of 16650 (maximum fall was to 16828 in March) and could rise to 21000-21500 by the end of the year. Ultratech Cements, APL Apollo, Exide Industries, Gujarat Flurochemicals, Zensar, Aurobindo Pharma, Birlasoft and JBM Auto are the technical picks that hit the bull’s eye this year. These were either covered as Investment Focus/Chart Focus or under the Movers and Shakers column on Sundays.
In our yearly outlook for 2023, we were bullish on gold, with factors such as the peaking of US interest rates, global growth concerns and the potential accumulation of the precious metal by the central banks expected to boost prices. Although a drop in inflation was a negative, gold managed to do well in 2023, supported by geopolitical tensions. We forecast gold to rally 10 per cent to touch $2,100 an ounce in 2023. It touched a high of $2,136 in early December before ending the year at $2,062. As always, we sounded off readers on sovereign gold bond investments whenever a new series opened.
Feedback and new beginnings
‘Reader engagement’ has been a prime focus for us and, over the years, I have seen that feedback, both positive and negative, and in that some incisive ones, often bring a whole new perspective to what we write and how we write it. This year, we have written on some discerning subjects readers have asked for, the two-partBig Story on valuations ) being an example. A ‘reality check’ on the Power Grid InvIT was written following a reader request.
We added a daily ‘Bank Nifty call’ along with the regular ‘Nifty call’ in the online section, for our trader-readers who follow market technical closely. On the multimedia side, I began hosting a monthly podcast on markets since August 2023 under businessline’s‘State of the Economy’ podcast umbrella, with market experts from various segments of the industry sharing their insights for investors. Vidoes on yearly technical outlook for key indices were also launched in 2023 and will now continue to greet you in the first week of 2024.
We always try our best to respond to all genuine queries and comments in social media, mail /Whatsapp/SMS through the respective mediums or through our ‘Readers’ feedback’ column in print. In 2024, I plan to take reader engagement a step further by writing to you more regularly on Sundays, which could offer you a sneak peek into our newsroom — our subject choices and our thought processes. BL Guru videos have been popular since their launch in 2022 and in the coming year, a video everyday based on the popular ‘Today’s Pick’ (print) or ‘Stock to buy today’ (online) column is planned. A fresh bl.portfolio newsletter is also on the cards.
As always, we have our ears to the ground in 2024 too, to have you covered financially. Do reach us to us and let us know on what more you would like to read in bl.portfolio and where we can improve.
Keep reading and, more importantly, giving your feedback.
Happy New Year!