Simplicity Investing India Private Limited

Most Buying has been done in the FMCG sector in the last month

Every woman must be financially independent.

According to the CIA (US) Iran might attack Israel in the next 48 hours, they had vowed to take revenge for Israel attacking the Iranian embassy in Syria on Tuesday (April 2), killing at least 13 people including General Mohammad Reza Zahedi, who was a senior leader of the Iranian Quds Force. If Iran attacks Israel, then there is nothing to panic as India's oil imports from OPEC countries have gone down drastically.

Iran was one of India's top 3 oil-importing countries until 2018-2019. But After US Sanctions on Iran India has stopped all oil purchases from Iran since 2019. Currently, India's top oil supplier is Russia and Saudi Arabia. On January 2024 EAM Jaishankar declared that India might resume buying oil from Iran. In case, Iran and Israel war starts then it will be halted.

The technology sector still shows great value.

The Bank set the overnight call rate as its new policy rate and will guide it in a range of 0-0.1%. What does that mean for you?

The government of India is focusing more on organizing the unorganized Jewellery industry. Organizing the sector will help a few established brands get a larger market share.

In the next 5 years, India will get a 50% jump in UHNI Population.

NVIDIA is truly the envy of the World. NVIDIA reported its last quarter’s revenue at $22.1 billion and the share price was 16% up in a day, which means NVIDIA added $277 billion to its market cap in a day. This is the second time in the last two years NVIDIA stock had a tremendous single-day gain. Leading by AI and new-age technologies most of the world markets saw a significantly positive day after a long time.

India’s Digital Economy is booming and is going to reach new heights within 2030 surpassing IT services as a whole.

In 2023, the travel tourism industry's contribution to the GDP is estimated to be over US$199.3 billion, expected to reach US$ 512 billion by 2028. In India, the industry’s direct contribution to the GDP is expected to record an annual growth rate of 7-9 % between 2024 and 2030.

The US markets have gone up recently, but the growth has come from only the top 7 stocks of the S&P500. The rest of the 493 stocks are still at a lower price to earnings showing that if another upmove is to come that will be from those stocks, which can be a good reason to invest in the US.

Happy Republic Day

Since India's first Republic Day in 1950, marked by modest GDP amidst post-colonial challenges, the nation has evolved into a global economic powerhouse. As the nation celebrates the principles of democracy, justice, and equality on Republic Day, it also stands as a testament to the economic progress achieved. From the early challenges of nation-building to becoming one of the world's largest economies, India's journey on the economic front aligns with its commitment to upholding democratic values. Republic Day serves not only as a commemoration of India's constitution but also as a reminder of the strides made in fostering economic prosperity alongside political and social advancements.

Sovereign Gold Bonds (SGBs) are the best gold investment option in India for several reasons.

First, SGBs are backed by the Government of India, making them a relatively safe investment option.

Second, unlike physical gold, SGBs do not have any additional charges such as making charges or exchange fees.

Third, SGBs provide an additional 2.5% interest per year, which is higher than the interest provided by other gold investment options.

Fourth, SGBs are available in denominations as low as one gram, making them accessible to a wide range of investors. Finally, SGBs can be bought and sold on the secondary market, providing liquidity to investors.

The next tranche of the Sovereign Gold Bonds scheme will be open for subscription from February 12-16, 2024, and will be issued on February 21, 2024

In simpler terms, the chart suggests that there is a promising investment opportunity in the banking and pharmaceutical sectors. We are comparing the performance of these sectors to the NSE SmallCaps Index, which represents smaller companies in the market.

The blue line represents the performance of the banking sector relative to the small-cap index, while the red line represents the pharmaceutical sector compared to the small-cap index. According to the data, there have been periods lasting about four years each, where both the banking and pharmaceutical sectors have not performed as well as smaller companies.

This might be due to a strong focus and positive sentiment towards smaller companies. However, we notice a pattern where these sectors go through cycles, and currently, we believe both the banking and pharmaceutical sectors are at a point where they might start performing better.

The reasons for this expectation include strong sales growth, good profit margins, and attractive valuations in these sectors compared to the broader market. We believe that a mix of large companies along with investments in these sectors could result in a well-balanced portfolio with better growth potential. Overall, we are optimistic about finding good opportunities in the banking and pharmaceutical sectors based on their current valuation and performance trends.

“2024 is for Large Caps” - Why institutions are talking about this?

History shows that after a massive outperformance in small and mid-cap stocks over the large caps, the next few years are painful for small caps.

While large caps are much more consistent in their performance with lower volatility.

Simplicity Investing wishes you a New Year filled with joy, success, and exciting adventures! May it bring you good health and happiness. Here's to new beginnings and wonderful moments. Happy New Year!

Sincerely
Team Simplicity Investing

Diversifying your portfolio across sectors is crucial for risk management. It helps balance the impact of market fluctuations in specific industries, reducing vulnerability to sector-specific challenges. By spreading your investments, you enhance stability and increase the potential for long-term growth.

The Sensex's ascent from 60k to 70k was purely driven by domestic money. DIIs have put in 5.23 lakh crores since Sep 24, 2021, while FPIs were net sellers of 70,000 crores.

The pace of Sensex's upmove to 70,000 quickened in the last 1.5 months following a decline in US bond yield, softening of the dollar, and political stability in recent state elections. Next year it's very likely that FPI and FII will start buying and the market will move to even higher levels when that happens. FIIs would buy large-cap and top 250 companies more.

The technology sector in India has a huge growth potential but how much? In this chart, we have compared the technology company's total market cap to understand how much space there is left for growth in India. Currently, the technology sector in India is mostly dominated by Technology Services companies like TCS, and Infosys. Still, slowly fully-fledged technology companies will start to grow, increasing the Tech sector's contribution as % of the total market cap.

India’s pharma industry is booming, thanks to its ability to produce and export high-quality and low-cost medicines. It is one of the key sectors that boosts the country’s economy, accounting for 1.72 percent of its GDP. By 2024, it is expected to reach a whopping $65 bn in value, and by 2030, it could double that amount. India is a global leader in generic drugs, supplying 20% of the world’s demand. No wonder India is called the “Pharmacy of the World”!

The population of India and the income of the middle class will rise and, as the income of the middle class rises it will help a few sectors more than the others. In the image we have discussed how the Hospitals will get the most out of this change.

India is Changing.

India’s household income is going to rapidly rise in the next 8 years. In this graph, we have shown, as per population, what people’s monthly average income is and what it will be in 2031.

This rise will help the country grow larger, but it will help a few sectors rise faster than the others. The sectors have been shown in the image.

People of Jalna, we are coming to help you with your investments 🥳. Join us as we open our newest office in Jalna tomorrow.

🪔 Wishing you and your loved ones a joyous and sparkling Diwali! May the Festival of Lights illuminate your life with happiness, prosperity, and good health. May this Diwali bring success and fulfillment to all your endeavors. Enjoy the festivities and the warmth of family and friends. Happy Diwali! 🎉✨

is at nearly the same level as it was on 28 June 2023 (4 months ago) but is it really the same?

The price to earnings of NIFTY 50 and the price to book value of NIFTY went down but the earnings per share went up while the market corrected by 6.2%. What does that mean?

That means the market is giving you an to buy at a lower valuation. Many good companies are available at a lower price. There’s nothing to panic about. Indian economy is still strong, and we see it growing better from here.

Note: Correction is from 52 weeks high and the data compares to the levels of NIFTY as it was 4 months ago on 28 June.

Hospitals are needed for a country to grow rapidly, but…

Are there enough hospitals in the country? Last week we posted that how far behind India is in the hospitals sector when it comes to the number of beds compared to China, Europe or other developed regions of the world. India was lagging behind.

Now it looks like the trend is changing. Hospitals are starting to rise, and we predict that they will rise more and more as the country grows. Currently the representation of the total healthcare industry in NIFTY 50 is somewhere around 5% (as of 29 Sept 2023), but hospitals represent just hardly 0.5% of NIFTY50. This has started to change, and it will be visible very soon. Hospitals will start to take higher weightage in NIFTY as India grows. As of today, the only hospital in NIFTY 50 is Apollo Hospitals as the 48th company in top 50 in NIFTY. We will see more hospitals in NIFTY in coming years.

Nifty 50 Index constituents collectively contribute to approximately 59 percent of India's total market capitalization. This highlights the significant influence and relevance of Nifty 50 stocks in the Indian stock market.

But there are few stocks in the Nifty, thirteen companies have been part of the index since its inception in 1996. These companies are HDFC Bank, RIL, HDFC, ITC, HUL, L&T, SBI, Tata Motors, Dr. Reddy’s Labs, Tata Steel, Grasim, Hero, and Hindalco.
Their enduring presence symbolizes their resilience and adaptability in the dynamic market.

The combined market capitalization of these 13 companies experienced an impressive Compound Annual Growth Rate (CAGR) of 18 percent between April 1996 and February 2021. This underscores their contribution to the Indian stock market's overall wealth creation. Though in 1996, the Nifty had zero representation from the Information Technology (IT) sector, while other sectors like Consumer, PSU Banks, Oil & Gas, NBFC, Autos, Metals, and Textiles dominated the index.

The inclusion of the IT sector in subsequent years reflects the evolving landscape of the Indian economy and the rise of technology as a pivotal market force.

When Oil Prices go down, then nearly every sector feels the effect, but a few sectors get more affected than the others. If we find the top and niched sectors, then they include the sectors discussed here.

Tyres: Oil is the key raw product of the Tyre industry accounting for more than 30% of all costs, so if oil prices go down then it directly reduces the cost of production.

Aviation: This is another industry that feels the direct effect of the drop in oil prices. The airline industry’ cost of operation is more than 35% dependent on oil. So, a drop in oil prices has a positive effect.

Similarly, as oil is the major expense for synthetic textile, lubricants, paints and FMCG industry, drop in oil price directly increases the profitability of these sectors. Also, remember that the increase in oil price affects these industries negatively.

I.E. There are more sectors that are affected but here we discussed the direct and most affected sectors only.

Total hospital beds in India are around 20 lakhs, which means there is only 8 beds for every 20,000 people or just over 0.4 beds for every 1000 people, while China and EU have around 4.5 beds for every 1000 people.

WHO recommends a country to have at least 4.7 beds per 1000 people. The beds count in India will see a sharp rise in the coming decade with the private sector adding the most number of beds, while the hospital industry will see tremendous growth. Currently 63% of hospital beds are in the private sector and 37% in the public sector.

Currently 63% of hospital beds are in the private sector & 37% in the public. ICU beds & ventilators are concentrated in the private sector, with 59.262 ICU beds & 29,631 ventilators in private hospitals compared to 35,699 ICU beds & 17,850 ventilators in public hospitals.

High interest rates are here to stay. How will it affect the Banks?

During long term high interest large cap banks perform better, midcap banks profitability gets impacted and Small Cap banks struggle to stay competitive.

When interest rates stay high for a longer period of time due to high inflation and high government borrowings, the cost of raising funds by banks goes up.

As a result, the large cap banks' profit margins become better than small and midcap. As the cost of borrowings are higher for small cap and midcap, they have to take more riskier loans and they will see rise in NPA. So, during these kinds of markets large cap perform better.