As stock markets hover near all-time highs, investors are still looking for investment opportunities to create wealth. In an exclusive conversation with BTTV for Market Masters show, top Market Guru Raamdeo Agrawal, Chairman & Co-Founder, Motilal Oswal Group, shared how to time the market for best returns, tips to spot multibagger stocks, investment strategy for 10x returns, and more
Answering a question about how one determines the right time to buy, sell and hold in order to get the best returns, Raamdeo Agrawal said that when it comes to timing, don't bother about the market. "Research about the company, and if the stock looks attractive at the price quoted in present, you buy the stock and wait, and even if the stock corrects in the future, don't let it shake your conviction in the company and hold."
Raamdeo Agrawal advises one not to confuse what is happening in the broader market with the value being offered by the company that one has researched. "In the top of the market you can get the cheapest company, and in the cheapest market, you can find the most expensive company, so do your research," said Agrawal
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When asked about whether there is a possibility of a strong bull run ahead of the general election 2024, Raamdeo Agrawal said, "Bull run is already on. From 8,000 levels in March 2020, Nifty is up around 3.5x. We are already in a bull run. Can it become more ferocious? Let's not be more greedy, hope that market keeps growing at about 12-13% at the index level, and pick our bets.”
According to Raamdeo Agrawal, a retail investor needs to identify companies that can deliver a 25% growth in earnings over the next 10 years. He said that an investor has to make sure they understand the business well. If a retail investor is looking for a 10 times jump in a stock price in five years, they would probably have to look at speculative trades, he added
Market veteran Raamdeo Agrawal believes one should have clarity on the difference between a speculative trade and investing in a potential multibagger. If a retail investor is looking for a 10 times jump in a stock price in five years, he would probably have to look at speculative trades, he said
On the other hand, a 10 times return in 10 years, as per Agrawal is decent - 25% return compounded annually, and the stock would be considered a 'multibagger'. To achieve such a return, a retail investor needs to identify companies that can deliver a 25% growth in earnings over the next decade, the ace investor noted
If the investor gets his projections right, he may end up seeing 23-28% returns annually over the decade period, thanks to re-rating on the counter. "If you are conservative in buying price, that is how a portfolio approach works. Out of 10 stocks, you will get 4-5 stock selections right while another 4-5 will deliver mediocre returns. But you will still end up getting 24-25% return annually," said Raamdeo Agrawal in an interview with BTTV
According to Raamdeo Agrawal, one has to do homework, focus on the company's earnings, make sure to understand the business of the company well, and do spreadsheets for those companies. "Look at options volumes, look at futures volumes, people don't want to make money tomorrow; they want to make money in the next half-an-hour. I don't come from that school," he said
Raamdeo Agrawal, who is hopeful about corporate earnings over the next 12 months, said the market delivered 13-14% return annually over the last 35-40 years and that the future is even brighter. Even if one does not assume optimistic estimates and considers the earnings growth in the next 40 years to be similar to the last 40 years, the market veteran said that 12-15% returns annually are possible in the long-term
Raamdeo Agrawal believes the Indian stock market is reasonably-priced and broadly distributed. He feels stocks are neither depressed nor there is any exuberance in the market, at present, similar to the ones seen in 2000 and 1992. Agrawal said the $3 trillion Indian stock market should be around the $9-10 trillion mark over the next 10 years
"Do we have the patience? The market is all about patience," Raamdeo Agrawal said while advising investors to stay put. The market veteran said TCS, Wipro, and Infosys were small companies in 2000 but are giants now. "One has to give time not only to the company to grow but also to the market itself," he said
If one looks at a 40-year chart, one may think that the stock market has not seen any correction. This is even as the market has seen many 40-50 percentage points corrections from highs during the last four-decade period. "One has to be very careful with the market. Nobody knows the market truly. But my experience tells me that if the corporate earnings are growing at 15%, there is no reason why eventually we should not be making 15-17% return in the market," he said
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