Do it yourself

In recent weeks, a lot of market participants and commentators have expressed concern about the rising household (retail) investors’ interest in the SME segment of the Indian stock market. It has been highlighted that most of the businesses being listed on this platform may not be genuine and/or sustainable. The regulators have also expressed apprehensions about the widespread manipulation in the prices of several SME stocks. A 400x oversubscription to the recent Rs120mn IPO of a motorcycle dealership in Delhi has provided further impetus to the discussions on this topic. There are demands that the criteria for listing on SME segments must be tightened and there should be deeper scrutiny of the companies proposing to list on this segment. The regulator, SEBI, is considering these demands and intends to prescribe stricter rules for the SME listings. In this context it is pertinent to note the following points. 1.      As part of the broader capital market reforms, whi...

I had an opportunity to meet a group of market participants and industry representatives at a corporate event this week. The discussions over lunch and tea revolved around the three broader topics – (a) State of equity markets; (b) Expectations for the final Union Budget for FY25; and (c) Corporate performance. Unsurprisingly no one was interested in discussing politics, geopolitics and the US Fed’s policy. Equity markets Most people were satisfied with the performance of markets in general and their personal portfolios in particular. Almost everyone believed that the stock prices will continue to rise for the next couple of years at least; though there could be some intermittent corrections. Everyone appeared prepared to invest more money in stocks. The return expectations from equity investments were in high teens on the lower side. With a few exceptions, most people appeared market cap agnostic in their investment strategy. In fact, the awareness about SME segment stocks surpr...

 I had an opportunity to e-meet the promoter of a decent sized enterprise yesterday. His company manufactures some auto parts mostly for replacement market. The business of this company had been doing extremely well for past more than a decade, before it hit a small bump last year. It recovered from the fumble in two quarters and was about to regain its pre Covid trajectory in 1QFY22. The intense second wave has however derailed the business from recovery path. The promoter now expects the business to normalize not before summer of 2022. Even for that he is not very confident. I have known this gentleman for past 17years. It was for the first time I found the gleam in his eyes missing. A driblet of sweat on the temple was also rather conspicuous. He is not only worried about his business. The worries are in fact emanating from a variety of factors. For example, ·          Having lost couple of senior family members to Covid, the family is...