Expert Analysis of the Global Macro Events & News affecting the Indian Markets

Weekly Synopsys

Introducing the Green Sharks series

In 2018, we started with a modest INR 5 Crore AUM and today we are managing nearly INR 600 Crores. Green Portfolio is marching towards its 5-year mark post receiving our SEBI license. The journey has been overwhelming. We experimented with several ideas pertaining to the markets, succeeded in a few, learnt from some, and failed at many.

What gives me pride is that, despite all the odds in the broader market, we have delivered consistently and been ranked in the top decile as a PMS, and have gained the trust of thousands of investors and many HNIs and family offices.

We have only grown stronger with the markets along with a stronger and more resilient team.

We are glad to have witnessed many market events – the US-China trade war impact, COVID fall and rise, lingering uncertainty with inflation and interest rates, and how the market reacts when an unexpected war breaks out.

The last 18 months have been subdued for the markets, and perhaps an emotional rollercoaster for many of our investors. A large proportion of our Smallcase investors joined the journey during the late phase of the bull cycle, and it has been a difficult period for them. As markets went cold and became brittle, especially the small and mid-cap space, we had several investors fold and call it a day.

We always want to maintain an “investor first approach”, and cycles like these are warranted, that’s what we love about the markets. But during tough phases, it becomes challenging to have investors see the markets and the underlying companies from our lens.

Hence, we have launched “Green Sharks” – part of our further differentiated initiative and a first in the industry.

In this initiative, we are bringing to you the promoters of listed companies, mostly our portfolio companies in the form of an interaction series through YouTube. This will help our investors know their promoters and management, their businesses, their background, success path, struggles, future initiatives and much more.

Finding and analysing “below the radar stocks” runs in our blood. Tracking quarterly results, con calls, macros, and other updates, etc are part of our research process. Through “Green Sharks” we are going over and above to showcase our conviction directly to the public.

So, stay tuned, follow our channel, and track our updates. I promise, these interactions are going to be fun, enjoyable, and interactive as we get into the minds of the leaders of the listed space.

Let’s Look at the Valuations of Small and Midcaps – not similar to NIFTY

This week, instead of going into stock specifics, we are looking at the broader market. Let’s leave out the Nifty and the large names we have all heard of. This week we are looking into listed small and mid-cap companies. Looking at the indexes and Price-Earnings ratio as a valuation metric, this is what valuations look like.

The leading small caps and mid-caps are trading near COVID levels, so according to the markets, these companies that are part of the index are facing severe headwinds, or are expected to face severe headwinds. As news outlets would phrase it, “COVID was an unprecedented event”. So as valuations point out, just because of rise in interest rates, prolonging war, and a slight chance of a full-blown banking crisis, are we going to shut down these factories, declare curfew, and are exports going to approach a standstill?

This is highly argumentative. Interest rates have peaked, war has been going on for more than a year now, banking crisis has been contained by the Fed and UBS, and inflation is slimming. These small and mid-caps we talk about first faced with the brunt of inflation, capex inefficiencies, and then, as a nail in the coffin, a slump in export demand. We believe the small and mid-cap space is bottoming out (about to stage a recovery).

Peaking Interest Rates

RBI will decide on the repo rates on the 6^th of April. There seems to be consensus on RBI raising rates by 25 basis points to 6.75% and would keep it there for the rest of the year. Higher interest rates mean higher EMI on your home and car loans, higher cost of borrowing, and trickles down to negative effect on equities in the end.

As we all know, inflation numbers are dictating the interest rate argument since RBI is fixated on tuning down inflation before all else. Food and beverages contribute 46% to the CPI Index, prices of vegetables, cereals and spices has a big say on what RBI should do.

Green Portfolio is a SEBI Registered (SEBI Registration No. INH100008513) Research Analyst Firm. The research and reports express our opinions which we have based upon generally available public information, field research, inferences and deductions through are due diligence and analytical process. To the best our ability and belief, all information contained here is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable. We make no representation, express or implied, as to the accuracy, timeliness, or completeness of any such information or with regard to the results obtained from its use. This report does not represent an investment advice or a recommendation or a solicitation to buy any securities.