Hunt for multibaggers: For some investors, race to become crorepati has begun
Are you also looking up on the internet for multibaggers? You are not alone. An analysis of Google Trends shows that the interest in ‘multibaggers’ is nearing the peak, which historically happens when the market is going through a correction.
The last time when it hit a peak of 100 was in April 2019. The Nifty50 corrected from 11,856 and made a low of 11,108 on May 14 before bouncing back.
A multibagger is a term used for a stock that has more than doubled in value over a time period. So a stock that has clocked 100 percent returns is a 1-bagger, 200 percent is a 2-bagger and so on.
If you input a keyword in Google Trends, it shows the historical interest in the term on a scale of 0 to 100, relative to the highest point on the chart for a given region and time. A value of 100 is the peak popularity.
The data also corresponds to new accounts, which have been opened recently. It looks like new investors have already made their base to generate multibagger returns, given the fact that we are trading at three-year lows.
The recovery on D-Street, according to most experts, will be swift but a complete recovery could take some time. The returns are likely to remain muted for 2020, largely due to the economic fallout of the coronavirus outbreak in India and across the world.
“Smallcase Technologies has seen an increase in its new investor numbers in March. They have seen a 3.5x increase in new account leads in March MoM, a 1.5x increase in new investors in March MoM, and 1.6x increase in orders in March MoM,” said a report.
“There is definitely negativity and pessimism. For the last two years, stock markets are flat but the last two weeks have been horrible. It started with Yes Bank fiasco, which impacted thousands of small-time retail investors, followed by global meltdown because of Covid-19 and sharp fall in crude oil prices,” Prakarsh Gagdani, CEO, 5paisa.com, told Moneycontrol.
He said existing customers were selling their positions, booking losses and some were also redeeming their mutual funds. “On the other hand, new investors are flocking to stock markets like never before. This trend is unprecedented. In 20 years of my stock market experience, I have never seen so many people opening accounts. Young millennials who have never tasted markets are coming in big numbers to invest which is a very good sign and also a silver lining in these bad times,” he said.
Nithin Kamath, Founder& CEO, Zerodha, shared the view. “We are also adding new clients at the fastest rate ever, which is even more surprising given the market conditions. This shows maturity on part of the investors,” he said.
Waiting for the right opportunity:
Indian markets are down by about 40 percent from record highs but investors are waiting for more clarity before putting in a lumpsum. However, most investors are continuing with their SIPs which is heartening.
We are in a bear market which has led to negativity and pessimism on D-Street. And if you thought that the last two years were largely flat, take a look at the last two weeks – they have been horrible.
“Currently, Indian Indices are in the bear market territory (a condition where indices tumble more than 20 percent from a recent high). According to the historic data, an index which is in the bear market territory might take 18 to 36 months on an average (to recover),” said Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor.
During the 2007-08 recession, the indices took more than 15 months to recover. “The recovery process will be slow, and investors should wait for the right opportunity. If a portfolio is down by 30-40%, recovery might take at least 18 months,” he said.
Garg further added that investors should stay with quality stocks and keep a watch on coronavirus turmoil as economic conditions, demand and supply would be the key factors in determining the recovery timeframe.
Global equity markets have tumbled in the last one and a half months as coronavirus infections have spiralled across the world. India hasn’t been spared either. Foreign institutional investors have pulled out more than Rs 56,000 crore in the cash segment of India equity markets.
US markets have fallen more than 35 percent from its recent peak, ending one of the longest winning streaks — of 11 years– in market history. Indian stock market, too, found itself in a bear grip and registered a similar fall of more than 30 percent from its peak in mid-January.
“FIIs have been on a selling spree, having sold equities worth more than Rs54,000 crore in March alone. While DIIs have put up a brave front by buying equities worth Rs46,000 crore in the same time, they have remained ineffective in controlling the sharp fall in the markets,” said Ajay Menon, CEO, Broking & Distribution, Motilal Oswal Financial Services Ltd.
“The majority of the retail investors who were already invested in the market did not get the opportunity to exit as the fall was quick and sudden. We have seen few investors who were willing to deploy money in the markets, however this has remained largely few and scattered,” he said.
Confidence had been badly shaken and investors were not sure when the markets will turn around, Menon said, adding they were willing to wait out before trying to accumulate.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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