While some investors may feel picking Sensex and Nifty stocks may help them to make a moolah, ace investor Porinju Veliyath says that such investors have all the reasons to be disappointed, as most wealth creation happens outside of these stocks. In a recent interview to ET Now last week, Porinju Veliyath said, “Those who have been index investor or following the Nifty and Sensex, have all the reasons to be disappointed in India because the big money is made outside. How many stocks have gone five times and 10 times in the last 365 days? Do you know that? A very large number. This is what I have been talking about in the last two years. Look at the midcaps and smallcaps in India where there is a turnaround potential.”
Just last month, he had told in an interview to BTVi that investors can easily make 30-40% in the next one year, even though the Nifty may more only to 12,000 by August 2018. When asked about his take on Nifty by next Onam, the ace investor told the channel last month, “Its very difficult to predict, because of saturated business in the composition of Nifty and Sensex. I used to predict it as there is no other way to make people bullish. Nifty can be 12,000, but investors can easily make 40% return.” Porinju Veliyath often advises investors to stay away from stocks which have global brokerage firms covering them.
There have been various proponents of smallcap investing, including Shankar Sharma of First Global. “I am unequivocally saying that small caps need to be bought as every single dip is an opportunity,” Shankar Sharma of First Global said last month adding that the bull market in smallcap still very young. However, some top market voices have pointed out that index investing may provide healthy returns, advising investors to devote a portion of their portfolio to index mutual funds.
In an interview to ET Now, N Jayakumar, MD of Prime Securities said, “Last time we talked about how indexed investing is not going to hurt people. I think index investing for a lot of people has been beneficial. You may not have got a three bagger, but you’ve got a pretty healthy growth. Portfolio’s are not made of three baggers alone.” In August this, year, N Jayakumar had advised to invest more than 80% passively.
“80-85% of your money should be index investing for most people. I am not saying that is for specialists who whether out of our own intellectual arrogance or otherwise, want to be in individual stocks but 15-20%, of course, you can be in midcap stocks but you need to have that deep dive. If you do not have the stomach to take a 30% loss, you cannot sit and say I must get a 10 bagger,” N Jayakumar told ET Now in August.