What's the Difference Between Direct and Indirect Plays?
What's the Difference Between Direct and Indirect Plays?
by chetram nagar
Thu, 13 Jul 2017
In this issue:»Retail Inflation Drops to Record Low»Improvement in Financial Health of DISCOMs»Market Roundup»And more!These are exciting times for the Indian economy and stock markets.As the economy stabilises after the wave of structural reform, we see no reason Indian markets can not go up 10xThe question is: Which stocks will lead the way?Do not count on current index stocks or large-cap companies to multiply your wealth ten times Market cap and popularity have nothing to do with the longevity and growth. Just look at the Sensex's constituentsThe list of behemoths that have fallen from grace is long And while some of these elephants may enjoy a smooth tour, they will not be able to sell the bull wave in Indian equity markets.Nor can you count on big trends (or themes) and direct plays on them. Think of aeration India has seen a phenomenal rise in domestic air travel. The trend captures the essence of India's story - growing middle class, huge working age population, urbanisation, and consumerism.Had you predicted this trend early and bet on the prominent players ... You would not have much to show for it. One of the direct flights - Jet Airways - has average 10% annual return over the last five years, underperforming SensexWhat did you do differently with this advance knowledge?943%That's the return on an indirect play on the aviation industry has given over the last five years.The company is Accolea Kale - a small-cap company you've probably never heard of unless you are a Hidden Treasure subscriber (recommended in March 2014).Accolia Kale's stock has offered an average annual return of 61%, beating the returns of Jet Airways (10% CAGR), SpiceJet (29% CAGR), and the Sensex (13% CAGR) by a wide margin.This is just one instance. As many positive changes sweep the economy and new-age businesses in the traditional business models, the prospects for indirect plays look great.That said, with the kind of money that's entering Indian equity markets, these plays could not stay hidden from the big investors for long, which would limit the upside. So you'll need to act fasterTo know more about these opportunities, refer to our special report, Backdoor Profits - The Small-Cap Way to Big Returns.Read this Now for PotentiallyBIG Returns ...
We just released our most important research report, ever.And we strongly recommend you read it now Without any delay.In this report, Research Analyst Richa Agarwal discloses details of three small cap stocks that have potential to be multibaggers.And we do not want to miss it.So, do not delayChart of the DayLet's now look at what's happening in the economy ... Retail inflation measured by the Consumer Price Index (CPI) dropped to a record low of 1.54% in June. The drop was mainly on the back of a sharp drop in vegetables and pulses. Does this call out for a rate cutFood inflation has dropped from a high of 7.46% in June 2016 to a negative 1.17% in June 2017. The main reason for the fall was a bumper crop. This in turn has fallen No wonder farmers are protesting to the minimum support prices (MSPs). Rising imports tooHowever, the number is RBI Core inflation excludes inflation The positive sign is that this number too is on a declining trend. Components of core inflation such as health, amusement, education, and transportation have been witnessed in a consistent fall.Falling core inflation bids well for a rate cut in the upcoming monetary policy meeting on 2 August 2017. Subdued factory output data for May may also encourage the RBI to cut rates.But a 25-basis point The RBI, in its previous monetary policy meeting, raised concerns about the impact GST could have on inflation It also cited fiscal risks from farm loan waivers These risks are still prevail.At Equitymaster, we do not try to predict how and when macroeconomic developments will unfold. Instead, we focus on the understanding of the underlying business strength of companies. In fact, The ValuePro team is always looking at all-weather stocks whose fortunes are not tied to economic cycles.In a positive news on Economic front, Central Electricity Authority (CEA) is planning a project for the power distribution companies (DISCOMs) to ensure an uninterrupted 24/7 power supply and improve the financial health of the DISCOMs
In this issue:»Retail Inflation Drops to Record Low»Improvement in Financial Health of DISCOMs»Market Roundup»And more!These are exciting times for the Indian economy and stock markets.As the economy stabilises after the wave of structural reform, we see no reason Indian markets can not go up 10xThe question is: Which stocks will lead the way?Do not count on current index stocks or large-cap companies to multiply your wealth ten times Market cap and popularity have nothing to do with the longevity and growth. Just look at the Sensex's constituentsThe list of behemoths that have fallen from grace is long And while some of these elephants may enjoy a smooth tour, they will not be able to sell the bull wave in Indian equity markets.Nor can you count on big trends (or themes) and direct plays on them. Think of aeration India has seen a phenomenal rise in domestic air travel. The trend captures the essence of India's story - growing middle class, huge working age population, urbanisation, and consumerism.Had you predicted this trend early and bet on the prominent players ... You would not have much to show for it. One of the direct flights - Jet Airways - has average 10% annual return over the last five years, underperforming SensexWhat did you do differently with this advance knowledge?943%That's the return on an indirect play on the aviation industry has given over the last five years.The company is Accolea Kale - a small-cap company you've probably never heard of unless you are a Hidden Treasure subscriber (recommended in March 2014).Accolia Kale's stock has offered an average annual return of 61%, beating the returns of Jet Airways (10% CAGR), SpiceJet (29% CAGR), and the Sensex (13% CAGR) by a wide margin.This is just one instance. As many positive changes sweep the economy and new-age businesses in the traditional business models, the prospects for indirect plays look great.That said, with the kind of money that's entering Indian equity markets, these plays could not stay hidden from the big investors for long, which would limit the upside. So you'll need to act fasterTo know more about these opportunities, refer to our special report, Backdoor Profits - The Small-Cap Way to Big Returns.Read this Now for PotentiallyBIG Returns ...
We just released our most important research report, ever.And we strongly recommend you read it now Without any delay.In this report, Research Analyst Richa Agarwal discloses details of three small cap stocks that have potential to be multibaggers.And we do not want to miss it.So, do not delayChart of the DayLet's now look at what's happening in the economy ... Retail inflation measured by the Consumer Price Index (CPI) dropped to a record low of 1.54% in June. The drop was mainly on the back of a sharp drop in vegetables and pulses. Does this call out for a rate cutFood inflation has dropped from a high of 7.46% in June 2016 to a negative 1.17% in June 2017. The main reason for the fall was a bumper crop. This in turn has fallen No wonder farmers are protesting to the minimum support prices (MSPs). Rising imports tooHowever, the number is RBI Core inflation excludes inflation The positive sign is that this number too is on a declining trend. Components of core inflation such as health, amusement, education, and transportation have been witnessed in a consistent fall.Falling core inflation bids well for a rate cut in the upcoming monetary policy meeting on 2 August 2017. Subdued factory output data for May may also encourage the RBI to cut rates.But a 25-basis point The RBI, in its previous monetary policy meeting, raised concerns about the impact GST could have on inflation It also cited fiscal risks from farm loan waivers These risks are still prevail.At Equitymaster, we do not try to predict how and when macroeconomic developments will unfold. Instead, we focus on the understanding of the underlying business strength of companies. In fact, The ValuePro team is always looking at all-weather stocks whose fortunes are not tied to economic cycles.In a positive news on Economic front, Central Electricity Authority (CEA) is planning a project for the power distribution companies (DISCOMs) to ensure an uninterrupted 24/7 power supply and improve the financial health of the DISCOMs
The
finances of certain discoms have improved considerably post the
implementation of the Ujwal Discom Assurance Scheme (UDAY) scheme. AT & C (aggregate, technical, and commercial) Not only this, many DISCOMs have taken tariff hikes leading to a improvement in their operational performance. Further, reduced interest costs, thanks to transfer of loans to their respective state governments, also improved cash flowsAs a result, DISCOMs are a better financial position to buy power from the electricity generation company. This will benefitWill
CEA's new plan to improve the financials of the state distribution
companies and help India achieves its goal of 24/7 uninterrupted power
supply? Time will tell ...At the time of writing, S & P BSE Sensex hit the 32,000 mark. All
sectoral indices are trading in green, with stocks in the FMCG &
capital goods sector witnessing maximum buying interest. The BSE Mid Cap and BSE Small Cap Index are trading higher by 0.3% and 0.4% respectively.Today's Investing Mantra"...
it's a huge structural benefit not to have a lot of money." I think I
could make you 50% a year on $ 1 million. "" No, I know I could. " - Warren Buffet
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