CAGRfunds – Blog

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	20-Oct-23	13-Oct-23	Change
Nifty 50	19,541	19,734	-0.98%
Nifty 500	17,208	17,376	-0.96%
Nifty Midcap 50	11,339	11,610	-2.34%
Nifty Smallcap 100	12,943	12,891	0.40%

Chart Ki Baat

Gyaan Ki Baat

Reverse merger

Reverse mergers are also referred to as a reverse takeover or a reverse IPO – when a private company becomes a public company by purchasing control of the public company. They are backdoor mechanisms which are chosen as a more cost-effective and expedited alternative when compared to traditional IPOs. Unlike a conventional IPO, a reverse merger does not necessitate the raising of new funds.

Reverse mergers are conducted with the aim of achieving various objectives, such as accessing capital markets for fundraising, increasing the company’s visibility and reputation, and facilitating acquisitions or strategic partnerships. For example, Warren Buffet’s company, Berkshire Hathaway went public with the help of a reverse merger.

Here’s the list of curated readings for you this week:

Personal Finance

• Gamification of Indian equity markets – In most global markets, derivatives volumes account for 5-15x their cash market volumes. In India today however, derivative volumes are more than 400x higher than that of underlying cash market today. Read here
  
  
• Some hard truths about money.  – A lot of financial planners I’ve talked to say one of their biggest challenges is getting clients to spend money in retirement. Even an appropriate, conservative amount of money. Frugality and savings become such a big part of some people’s identity that they can’t ever switch gears.Read here
  
  
• Indian Real Estate Market Insights – The residential market breached a nine-year high in terms of annual residential sales in 2022 in an inflationary environment that caused increasing concerns on economic growth across the world. Thus, while the momentum looked strong, it remained to be seen if it would sustain in 2023. Read here.
  
  
• A very different kind of “retirement problem– When we leave a country, we have some experiences, memories and perceptions which we take along. Read here.
  
  
• The UPI Paradox– UPI has made life easier for merchants and individuals, but has it become a bit of a burden for fintech startups?. Read here.

Investing

• A Paradigm Shift in India’s Consumption Patterns is happening right in front of us – With our youthful population and a burgeoning working-age demographic set to last for next 2-3 decades, the prospects for increased per capita income and disposable income are looking brighter than ever. Read here.
  
  
• Optimism And The Stockdale Paradox – To survive and succeed like Jim Stockdale, we need to hope for the best but also be prepared for the worst. That would necessitate keeping the faith even if economic growth slows, some macro indicators weaken or capital flows turn negative. It is easy to be an optimist when the portfolio is hitting new highs, but we must retain our optimism even when stock prices are falling. By confronting the brutal facts of the market, investors can avoid the trap of overconfidence and make more measured choices. Read here
  
  
• KPR Mill training its employees for other companies – Recently, it adopted a system of campus placements; so far, 5,000 employees have been placed in IT companies. Ramasamy says they are the first organisation in the world to let their employees move to other companies. The gesture has instilled confidence in girls who come to work for them from villages around Coimbatore. Read here.

Economy

• India Capex story – is the centre push enough? – Over the past few years, the public capex has remained strong mainly led by the centre. Notably, the share of capex within the total expenditure has undergone a substantial increase, rising from 12.1% in FY21 to 22.2% in the budget estimate for FY24. Read here.
  
  
• The gap between India and China is massive – While China’s growth is downshifting, it was still massively larger by nearly $15 trillion dollars last year, says HSBC. “Even with China’s growth slowing, and India’s accelerating, the gap between the two economies will continue to rise for the foreseeable future, expanding to $17.5 trillion dollars by 2028 on the IMF’s forecasts,” the report says, adding that this difference is equal to the current size of the European Union’s economy. Read here.
  
  
• Dramatic times in Japan’s capital markets: Jefferies’ Chris Wood – The intervention by the Tokyo Stock Exchange to improve capital efficiency among listed companies has proved “decisive”, according to the global head of equity strategy at the brokerage. Read more.
  
  
• The Warehousing Boom in India – Sensing the opportunity in warehousing infrastructure and expected rise in demand, institutional investors are pumping in capital. The sector has received $10 billion investment in six years since introduction of GST. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index	29-Sep-23	22-Sep-23	Change
Nifty 50	19,638	19,674	-0.18%
Nifty 500	17,293	17,261	0.18%
Nifty Midcap 50	11,612	11,495	1.02%
Nifty Smallcap 100	12,749	12,476	2.18%

Gyaan Ki Baat

Volatility Index (VIX) – This is a real-time market index that represents the market’s expectations as to volatility over the next 30 days. When markets rise or fall dramatically, the VIX rises during this period and falls when the market is less volatile. A rising VIX does not indicate where the market will go. Investors often get confused about the VIX and the market index, the market index provides the direction of the market while the VIX measures volatility in the market.

For example, if the Indian VIX is in the 20s, the Nifty could move up or down 20% from its current level over the next 12 months. This means that if the Nifty is currently at 17,500 and the Indian VIX is at 20, the Nifty could fall as low as 14,000 or as high as 21,000 in the next 12 months.

Chart Ki Baat

Courtesy: PPFAS financial Opportunities forum presentation by Rukun Tarachandani

Here’s the list of curated readings for you this week:

Personal Finance

• 24 Things I Believe About Investing –  Here are some things I believe about investing. Read here

• Zerodha turns 13 – The Bengaluru-based company said it gets a bulk of its revenue from futures and options traders. Talking about the trading activity in F&O, Kamath said the total number of people trading F&O is still not that large in India. Read here.

• Why does international investing make sense for you? – A domestic-only portfolio hinges on the expectation that the domestic market will do better than global markets, which may be a risky bet. A geographically diversified portfolio enables an investor to participate in regional rallies but, more importantly, helps reduce volatility in the long term. Read here.

Investing

• Navigating the smallcap landscape – PPFAS – In recent years, the Smallcap sector has garnered significant attention. This presentation employs a data-driven perspective to delve into the Indian smallcap equity market. The presentation aims to determine if there’s a genuine opportunity within this segment and, if so, explore the challenges in capitalizing on that opportunity. Watch here

• Why Selling is so Hard to Do – What is it that keeps us from selling a stock? Whether it’s gone up or down, many times, what we’re worried about is regret. We’ll feel stupid if the stock goes up afterward. Even worse, the stock we bought instead might go down while the one we sold goes up. Read here.

• The rise of crazy rich Indians – Marcellus – A new generation of around 200,000 super rich families (or 1 million individuals) are making their spending muscle felt. It behooves us, therefore, to tilt our portfolios away from ‘mass’ and towards ‘class-based consumption. Read here

• Is it different this time? – Solidarity – It is not different this time, just the behavioural cycle at play in Small caps and select sectors. However, some nuance is required on ascertaining fair value. One should be willing to pay a “small” premium for “certain” companies at present. But for most companies in the market, one should not break valuation discipline and wait out the euphoria. Read here.

Economy

• India’s inclusion in J.P. Morgan GBI-EM Global index to lead to inflows of at least $18 -22 billion in FY2025, auguring well for G-sec yields and INR. Read more.

• India is not only growing but it is doing so efficiently – It’s crucial to assess whether the capital injections into the economy are yielding proportionate outcomes. Over the past decade, India has made significant strides in this regard, with the ICOR decreasing from 7.5. In the fiscal year 2022-23, the ICOR reached an impressive low of 2.1, marking a decade-long record. Read here.

• India has a demographic advantage, but, demographics alone may not become destiny –To live up to its aspirations, India needs a healthy and well-educated workforce. Only then demography become destiny.  Read here.

• India falls short of FTSE Russell government bond index inclusion – Areas for improvement in the Indian government bond market structure highlighted by international investors remain largely unchanged from the previous March 2023 review,” FTSE said in its annual country classification review. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.