Nifty

Hi,

Let me start with a question today…

Which category of investor do you belong to?

  1. I will not invest now because the Nifty has fallen to the 10,700 levels.
  2. This is the best time to invest because the Nifty has fallen to the 10,700 levels.

Why do I ask this question? Let me tell you why I ask this in a bit.

With what we are experiencing in the overall economy these days, is something extremely similar to what the economy had experienced in 2001-2002.

What are those similarities?

  1. Auto sales are down
  2. Consumer sentiments are extremely weak/poor
  3. The growth rate is down
  4. Banks are facing the NPA roadblock
  5. And also take a look at the table below:
Year Nifty EPS Growth YOY Year Nifty EPS Growth YOY
1999 61 -19% 2016 394 -5%
2000 66 7% 2017 417 6%
2001 69 5% 2018 445 7%
2002 74 7% 2019 487.0 9%
2003 91 23% 2020e 580-617 19-27%
2004 136 50% 2021e 680-729 17-18%
2005 165 22%
2006 187 13%
2007 273 46%

How similar was it then to now? Extremely similar right?

  • 1999 was a year with a negative EPS growth – 2016 was a year with a negative EPS growth
  • 2000-2002 were slow years. Similar to the slowdown we are witnessing from 2017-2019.

And then what happened between 2003 and 2007 was every investor’s dream run.

Unfortunately, not many investors benefitted out of this bull-run.

Coming back to the question I asked at the start, the investors who fell in category 1 probably repented.

But for investors who fell in category 2, they would have created a fortune for themselves and their family during that phase.

Coming now, the past 3-4 years have witnessed negative to slow growth in EPS because of the much-required cleaning process initiated by the government. And this seems to be the time when the economy should be reaping the rewards, and these rewards look a lot more certain and sustainable going forward.

In view of this, we do not want you to miss out on starting your wealth creation journey during such times.