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Financial Planning is a Must to deal with Recession

Most industries across the world are reeling under huge stress due to recession.

The Software and the Technology industry is the worst affected. Expect more Job Losses and Lay-Offs with advancement of Big Data Analytics and Artificial Intelligence.

It makes sense to get yourself Financially Prepared before any untoward incident hits you or your family.

The below picture speaks volumes of an employees life in all industries today.

 

***

We had posted an article in 2016 related to this and that holds true even today. Many Software Engineers and employees of other industry approached us after reading the article and they are much more confident people today. Click Here to read the article. Tamil Version: Click Here

 

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20 Lakh Crore Push

There was recently news that Indian govt to borrow 12+ Lakh Crores this year. Intellectuals with half knowledge went berserk without knowing that the govt anyway borrows around 8 Lakh Crores yearly and this was additional 4 Lakh Crores or a 50% additional borrowing.

The government may garner another 1 Lakh Crore by way of fuel taxes which were hiked recently. The lower crude prices are a boon to India and those intellects who keep cribbing that the benefit should be passed to the consumers don’t understand that such moves will negate all benefits which lower prices bring on the table. You should also read this old article of mine on fuel prices: https://vridhi.co.in/2016/01/06/few-words-on-market-33/

Even after read, that old article is a person doesn’t get convinced then so be it. I would always support not passing huge benefits on crude, which ever government is at the centre, I would be with govt on this. Only condition: There should not be scams, and the money looted. That’s a fair condition, I believe.

The #EconomicPackage announced by #PMModi #NarendraModi should relieve many economists. The country was eagerly awaiting an economic package.

#CoronaVirus has put on back foot the global economy. No country has been spared. Most countries are announcing packages, and the central governments are also announcing stimulus packages so that the economy does not collapse and the businesses, people can be helped.

Today’s package at least sounds excellent. Cannot talk on details since the same will be made public tomorrow probably by the finance minister herself. Still, it looks great since it accounts for almost 10% of the GDP.

Few things we need to be clear on:

Don’t expect that monies will hit your bank account directly. Like the 15 Lakh lie, many people will try spreading such news.

My suggestion to the govt will be to support businesses and farmers only.

Stock Market will take this as a piece of great news, SGX Nifty is trading 5% higher as I write this article.

Pessimists will talk about #FiscalDeficit going up. Thankfully, the govt has been maintaining 3% to 3.5% fiscal deficit ratio, and this gives them the room to help people in this hour of need.

The package should help businesses so that they don’t go shutter down.

The package should help reallocate money in various sectors so that jobs can be created.

Fiscal Deficit will not be a problem if the package can bring back growth on track; hence all support should go where it’s needed.

I am bullish on India, I feel India will recover first in the world when this pandemic goes into history. More in the next post.

Please subscribe to the site. Read the below sentences.

I request you all to go to the below link and click subscribe on my YouTube channel. It sometimes becomes easy to record a video and post instead of writing the whole thing. There are all type of people, some like reading and some listening. Click Subscribe:

https://www.youtube.com/c/VivekKarwaIndia/

Also, When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Vivek Karwa

Corona Se Darona

200426 – The previous article ‘Sell that house you own and invest in shares’ invited varied feedback from investors. Since it’s quite simple to get in touch with us, people feel free to send us an opinion. Ya, sorry if I don’t respond to all of them since it’s humanly impossible for me to reply to all. I make sure all clients get replies from me as a preference.

Let’s come back to the topic. I sincerely feel you should once again read the above article before proceeding with this one. It was posted on 14-March-2020 when the panic was setting in, the crux of the post was that continue your investments, add on dips if possible, and surely don’t stop your SIP’s since once the panic lows are made we may also see similar sharp recoveries.

Ten days later, on 24-March-2020 the #Sensex saw a low of 25639 and the #SmallCap Index hit a low of 8622. Today, as I post this article, Sensex is at 31327 and Small Cap Index at 10633. You can calculate the quantum of recovery yourself.

The market is still reeling under #CoronaImpact, which has to be felt by the whole world. Three airlines have already filed for bankruptcy till now. Read the names here: https://www.facebook.com/MostWantedIndian/posts/10216111884102706

Expect many companies to wind off once the economy opens up. Keep in mind one companies pain will be other companies gain. Small companies in India will also feel the pain, but I think the impact on the Indian economy will be the least among all economies in the world. Thanks to our population.

Don’t go by what Raghu Ram Rajan or other similar disgruntled people write and say. Also, don’t pay heed to the people and politicians who are saying India is not fighting well the #Covid19. They will give you useless explanations that India is not doing enough tests, etc. All these are crap. Corona takes 14 days to show up, 28 days to kill if not checked. We are under lockdown for more than 40 days. If India was not doing well, we would by now be seeing 50000 death daily.

Hence, I expect the govt to open up places from 4-May-2020. The decisions will be left to the state govt’s since states like Maharashtra, Tamil Nadu and Rajasthan, Gujarat may not open up soon. Places like religious places, bars, restaurants, schools, colleges, malls, theatres may remain under lockdown for some more time.

So the bottom line is that markets will remain volatile. Though we recovered a lot, we will continue seeing up’s and downs. Ride the trends with regular purchases. Don’t stop your SIP’s and monthly investments.

Mr Chirag Patel of ICICI AMC gave an interesting example in a conversation recently. Markets are cheaper compared to the economy, and the markets have to follow the economy finally.

Assume a man is walking his pet and going to someplace. The strap to which the pet is tied up maybe a metre long. So what happens while walking? You will find that many times the pet is walking ahead of the man, and many times the pet is behind the man. But in the end, both the pet and the man reach the destination.

Here the pet is the market, and the man is the economy. In the short term, the market may move ahead or behind the economy but finally will do what the economy does.

Indian economy had started doing well in Dec-Jan-Feb and will continue recovering again once the Corona Impact is behind us, and the market will follow, it has to follow.

Remain invested. The ride will be a roller coaster one.

I request you all to go to the below link and click subscribe on my YouTube channel. It sometimes becomes easy to record a video and post instead of writing the whole thing. There are all type of people, some like reading and some listening. Click Subscribe: https://www.youtube.com/c/VivekKarwaIndia/

Also, When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Vivek Karwa, +919841036524

Sell that house you own and Invest in Shares

200314 – This post comes at a time when most investors are in panic mode over markets behaviour over the last three weeks, and the kind of bear rampage witnessed over the previous three trading days.

Hence I understand that I have taken up the tough job of writing this post since many emotions must already be high and most investors under confusion on what to do? I will try to write down what can happen and what we should expect and also will try to prompt a few questions which many of you must be having in the minds. You can decide your next step after reading the whole article.

I many times ask investors if they have experienced markets in the year 2008 during the sub-prime crisis. Of course, those who came into the markets in 2009 and beyond have not witnessed those movements. But I can surely say the panic is almost a repeat of 2008; hence 2020 and 2008 can be equalled.

If we consider the market movement since Jan’2018 when it started correcting, then safely assume that the 2018-2020 period has been worse than in 2008. Having seen 2008, I can say this firmly.

2008 was a sudden crash and a swift recovery, 2018 till date has been a slow grind, and that’s the reason it has been more painful. As already mentioned in the previous articles, Sensex and the Nifty were showing up, but the portfolios are down as rally has been quite narrow. The American market was also up and trading at hefty premiums.

Markets need a reason to correct. This time it was #CoronaVirus. Corona would turn out to be such a significant contagion, no one saw it coming, and it crippled the market so suddenly!

Equity markets always factor in the worst. When the market starts correcting, more than the usual, the weakest hearted jump in the first stage to sell their holdings, fearing more slide. The traders who were holding on bring in more margins to stay, but when more selling starts happening on bad news, the margins trigger, and the markets go into free-fall mode.

Exactly what happened on Friday too, the market hit the lower circuit at around -3500 points. Me, having seen four lower-circuits in my Investment career, believe me, a lower circuit signals that most panic has been factored in. More circuits can only occur in situations like a repeat of Italy in India or America.

A small post of mine in Facebook and other social media yesterday did wonders… it read as: We are not going to be asked to vacate the Earth and shift to Moon or Mars. Don’t panic” After this post, many investors called up and added money to their portfolios. And as we all know, the market recovered almost 5000 points from the day’s lows of -3500 to close at +1300.

We have seen such corrections during Y2K crisis, Sub-prime crisis, Asian financial crisis, European crisis, Brexit, WTC bombings. During all these crisis investors sold as if there won’t be any tomorrow, but then as it’s said, corrections are temporary, and the growth is permanent. A few months later we will forget this Chinese Virus too.

Most sensible people would invest in such situations. The valuations right now are juicy. One has to be aggressive at these levels and add more stocks or average the existing holdings.

I very well remember, in one of the interviews in the year 2008, in response to a caller I said: Boss you have two houses, sell one which is on rent and invest this money in the market right now. A few years later, you will be able to buy back the same house and still have loads of cash left in your hands.

To my surprise, an investor a few years later tweeted to me: Sir, I followed your advice, today I am very happy.

After 12 years I can confidently repeat the same. The panic is so much in the market right now that if you own two houses, one being extra fetching just rent,  sell it and invest the money in markets. Of course, do it with the help of an advisor. Can we see another 10% or 20% lower from here? We may or may not, but this 20% should not make you miss the possible 60%

Let me prompt few questions in your mind and answer them.

1. My existing portfolio is already down 50%; even my five-year-old portfolio has gone down, how can I invest?

For sure, it will be down when there is panic, but then as Warren Buffet says, Be Greedy when everyone else is Fearful. Average out the stocks. The recovery also can be swift this time. If your goal is 7+ years away, invest aggressively.

Looking at the existing portfolio while it’s down will only deter you from buying cheap.

2. I don’t have money, shall I sell now and buy lower?

That would be the most unwise decision. Except for God, no one knows which is the bottom. How sure are you to buy at the right price? And what if the Fridays rally continues?

3. I don’t have confidence, can’t add more.

At least wait. Sometimes the market can test our patience so much that it will make us sell and then only move up. At least add the extra amount you have in Hybrid funds to reduce the volatility and still give you some upside returns than that of an FD.

Friends, in 19 years of career in markets, I have gone through all the above emotions in my own life. I know how it feels, and hence my experience says go aggressive now not bothering about another 10 or 20% which may come or may never come at all.

A quick note on #YesBank:

This is a unique way of rescuing a bank which the government and the RBI have arrived at. It makes no point selling here. The bank was going down since no ‘Big’ investor was taking a stake in it.

But now you have SBI, HDFC, ICICI, AXIS, RJ, and other BIG names who have come to rescue. YES has great retain customer base and excellent technology. All it needed was money an which now has come in. At these rates, once should continue holding if not buying fresh. Hold on even if RBI brings in any kind of lock-in for the existing shareholders.

Hope you all go aggressive Monday onwards! Call your Investment Advisor today itself and buy more. Corona too shall pass.

I request you all to go to the below link and click subscribe on my YouTube channel. It sometimes becomes easy to record a video and post instead of writing the whole thing. There are all type of people, some like reading and some listening. Click Subscribe: https://www.youtube.com/c/VivekKarwaIndia/

Also, When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Happy Investing

Vivek Karwa


IAP at Karaikal and Pondy

Mr #VivekKarwa will be speaking at Karaikal and Puducherry on 24th and 25th Jan-2020. Please find the invites below and attend the program. Thanks -team #VRIDHI

Go Shopping this Diwali

191027 – We at VRIDHI wish you all a Very Happy Deepavali and a Great Future ahead. There may be ups and downs in life and markets, both are so similar, but finally those who show faith in life live happily, and those who show faith in markets make some money. We at VRIDHI are taking all possible steps to better ourselves to serve everyone. Even we tend to learn from all ups and downs.

In a previous article, some time back I had mentioned that the biggest problems in the country right now are Liquidity, Automobile Sector Sales and the Housing Sector. Further in the previous to this, I was very particular that you should take advantage of the pre-Diwali sale and invest more money even if your current portfolios may be showing negatives.

From that day to today, the market has shown lot of stability and the Mid and Small Caps are slowly showing signs of recovery. Sensex and Nifty may be at all times, but they are not showing us the real picture. Read few of the older articles on this topic.

The problem of Liquidity:

We the people always wanted a government which fights against corruption. No country in the world has zero corruption, but in India it hit an all-time high during the year 2013. The government later brought in reforms like Demonetisation, GST, RERA, IBC, etc,. Which resulted in severe squeeze in liquidity.

The squeeze got so severe that the companies with even little bit of debt on the books saw value erosion in the stock prices and finally they had to sell stakes or assets to reduce the dues. Those days of promoters enjoying at the cost of banks money and creating NPAs are gone. All NPAs seen right now are the old loans which were disbursed recklessly.

2013 was the worst year; The corruption was at its peak, the economy was at a situation were we were classified under Fragile Five, it meant India was on the verge of collapse, the Rupee was on ventilator, The Fiscal Deficit was at its highest, the then government stopped spending money. Even the then RBI governor Raghuram Rajan was not accommodative and didn’t increase the liquidity. The next governor Urjit Patel was equally stubborn.

None of the above situations holds today. The present RBI governor Shaktikanta Das has already reduced interest rates many times. He knows that if the economy has to move up then the rates need to move down. The economy is not in bad shape as projected by the Lutyens. The government right now has realised that it needs to spend, earlier their focus was on fiscal consolidation, but now they know that they need to spend and infuse liquidity.

The recent Tax Cuts are big. Not many realise the benefits which will flow in future.

There are people who get up daily in the morning and plan on what negativity they can spread that day on Social Media. Stay away from such fellows. India cannot enter into an of recession for at least the next 20 years. Our young population will take care of all situations, after 20 years situation may get grim as people get older.

I have not visited Japan, but have heard that once you cross the borders of Tokyo, finding people becomes difficult. South Korea has the 7th largest pension fund in the world; by 2030 the country will have no people left!

On Automobile:

70% of sales happen by financing. The automobile also has certain issues like BS-VI and EV’s coming up. Look at the stocks they have already entered the stability phase. We at VRIDHI have started building positions in the sector. We feel the last quarter of this fiscal will be good for the sector.

Housing Sector:

The worst is behind us in the sector. Things can only get better from here. Don’t expect any big shocks. People are Risk Averse, and hence the stocks get beaten down the moment a news is heard. True news or False news is no botheration, and the bears go for the kill.

I have recently created a WhatsApp Broadcast List for those who want to join. Save my number +919841036524 and send your name and city so that I can too save your number and add you to the list.

We have also created a Telegram Channel; you can join that in case you don’t want to join the WhatsApp Broadcast: Join the Telegram Channel:

https://t.me/VridhiMoney

The Current Situation:

Low Expectations, Low Valuations, Lowest Point of Growth which can only get stable from here, Improving Earnings, Improving Liquidity can bring some cheers to the market. Even the FII’s have returned.

The Crude is stable, Rupee-Dollar is stable, the government is stable and strong. Only a pessimist will avoid adding money in the market right now. If you don’t have fresh money, wait. Things will turn around. Don’t panic and exit the markets. There will be a moment when some changes will be needed in the portfolios. The moment market gives signals do that regiging work. We will advice investors on this.

Hence, this Diwali, burn off all the negativity which some people have dumped in your minds and think positive and continue investing. The amounts are not important; the discipline is.

I request you all to go to the below link and click subscribe on my YouTube channel. It sometimes becomes easy to record a video and post instead of writing the whole thing. There are all type of people, some like reading and some listening. Click Subscribe:

https://www.youtube.com/c/VivekKarwaIndia/

Also, When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Feel free to call or message us anytime.

Vivek Karwa

Pre-Diwali Sale

190915 – In my previous three posts, I have been mentioning that the so-called slowdown currently is due to the cleansing process by the government and how every defaulter is being taken to task. You should read them again so that we are on the same page of thinking. I am clear in my theory and firmly believe in it.

The opposition and media are making too much noise as if the world is going to come to an end. The rant by the opposition is understandable; they have no other choice. An old video was doing rounds on social media of a former finance minister saying the same words which the current finance minister is saying that the slowdown is temporary and will pick up.

No doubts there is a slowdown, no denying on it, no doubt the finance minister behaved amateurishly in the beginning, no doubt the government was also in denial on the slowdown, but then the realisation happened. The government is working with front foot forward in announcing various measures.

In the previous article, I also said: ‘The three pain points are Liquidity Crisis, Automobile, and Housing Sector.’ Now check the steps announced, including those of yesterday everything revolves around these three pain points.

These are issues as said earlier, also due to the cleaning process and will slowly subside. The Macroeconomic parameters are strong. Except for one or two factors, India is quite strong compared to the world. Hence the economy and the Indian Stock Markets both will bounce substantially going forward.

Media is making noise since Bad News Sells! How many times do you find headlines of a newspaper to be positive? As a person who does so many television shows on markets and economy, I know the mentality in and out.

The sad part is that people forward negative news and videos on WhatsApp without thinking even once. In the last 15 days video of an official spokesperson of an opposition party has been circulating on WhatsApp and Internet. His political lineation is clear once you visit his profile. In the video, he presents himself as an economist and then gives absurd logic and ideas.

People should question his biased logic once the predictions fail, which will surely fail. Listen to the words as though coming from a politician which they are. Scaring people is not appreciated.

While all these are happening, let’s check these few things:

BSE Auto Index at 16541, BSE Bankex 31681, BSE Consumer Durables 23587, BSE Capital Goods 17422, FMCG 8368, Metals 9093, BSE 500 14351

All the above Indexes on Friday have closed at a 1 to 2-month highs! Even the BSE PSU Index at 6658 is at a recent high!

Sends you a message? Some more:

RBI has been cutting rates

Govt has been announcing positive steps.

ECS has cut rates

Statement by Apollo Tyres: Automotive industry reaching the end of the downward cycle, demand uptick ahead.

Recent IIP numbers are good, and the inflation remains under control.

And the biggest news is that the FII’s and FPI’s have started buying. Buying may not be huge, but the unabated selling has stopped! Read here: https://www.moneycontrol.com/news/business/markets/fpis-turn-net-buyers-infuse-rs-1841cr-in-first-half-of-september-4437011.html

We have been cruising through bad times, almost for two years. All the previous good things were also wiped off during this phase. But the things looks like having settled right now. We are at valuations which cannot get much cheaper from here. One of the articles recently I had mentioned that we are at the lower end of the U curve and I maintain so.

Will keep you all updated on the happenings. Until then you can figure out how you want to use this pre Diwali sale.

I am initiating a new thing: I am creating Two WhatsApp group for VRIDHI which you can join by clicking any of the below links:

VRIDHI WA Group-1: https://chat.whatsapp.com/HAKdqAu1vRb0Pw80tLpM0G

VRIDHI WA Group-2: https://chat.whatsapp.com/JaDPPgm8w94HhXB6DAAyCo

*Not sure if the idea will work or not, but no harm in attempting. Will close the groups if the attempt fails.

*The idea is to keep you updated, and don’t worry, no junk or blind forwards.

*Join any one group only since the postings and updates will be same in both.

*Financial Advisors, Brokers, Agents etc, please don’t join, I will have to remove you.

*Those thinking ‘Privacy’ take a call, since there is nothing called privacy now-a-days.

*You are free to join or exit the group, I don’t feel bad for silly things.

Also: I request you all to go to the below link and click subscribe on my YouTube channel. It sometimes becomes easy to record a video and post instead of writing the whole thing. There are all type of people, some like reading and some listening. Click Subscribe: https://www.youtube.com/c/VivekKarwaIndia/

Also, When you visit www.vridhi.co.in on a laptop or desktop, you can subscribe for email alerts on future articles. If you are browsing on the phone, while scrolling up and down, you will find the ‘follow’ button. Do stay connected with us. Click Here for all over social media details.

Happy Investing

Vivek Karwa