Ace investor Porinju Veliyath took a dig at brokerage reports by research firms, calling the analysts “amateurs,” and advised investors to rely on commonsense and wisdom while buying stocks. The bone of contention was CLSA’s revision of target price on the shares of Biocon to Rs 440, from Rs 400. Interestingly, Biocon shares surged by more than 15% to year high levels on Monday, after the USFDA validated its biosimilar cancer drug Trastuzumab and approved it for the US market on Friday night. The sudden upsurge in the shares led Porinju Veliyath to tweet earlier this week, “Biocon moved up Rs 186 today (bonus adjusted) while amateurs and number crunchers had a target price of 400 & 440 recently – we are not holding now! Keep investing simple – use Wisdom & Commonsense liberally.” Biocon shares were trading at Rs 509 this afternoon on NSE.
Porinju Veliyath had earlier advised investors to stay away from stocks covered by large brokerage houses which created “noise.” In September this year, after Jefferies LLC, a global investment banking firm assigned a buy rating to the shares of Federal Bank, Porinju observed that the scrip was overvalued. In a conversation with ET Now, Porinju Veliyath had expressed that Federal Bank shares have rallied by more than 140% in the last 1-2 year period, and told investors to stay away from stocks where there is large brokerage coverage and noise. Interestingly, in the last two months, Federal Bank shares have tanked by more than 7%.
Decoding the composition of stock markets in India currently,m Porinju told ET Now recently, “ The other day I was talking about the current composition of market players. We have 10% bulls, 20% bears and 70% monkeys. This is an opportunity for the first 10%. This composition changes with time.” The Kochi-based portfolio manager observed that investors in India miss the ‘big picture’ while investing for the long term.
“Investors should not feel that equity investing is just secluded, wherein you look at the charts to buy and sell, that’s a very low end activity. Long-term investors who want to create wealth by investing in equities must look at a lot of things. Politics, the social structure, the changing landscape of the economy, the structural changes, how the corporate world is changing, the frauds, whether they are coming down or not. There are ‘n’ number of factors to consider, ” said the expert.