What a day it has been. Nifty almost kissed 25,000 but not quite yet; it didn’t cross it, came back down, and ended completely flat. However, there was a lot of movement in the market today. Several sectors, particularly public sector banks and public sector enterprise stocks, showed remarkable buoyancy. Stocks like Mazagon Dock Shipbuilders (Masdoc), Rail Vikas Nigam Limited (RVNL), and Bharat Electronics Limited (BEL) performed exceptionally well.
In today’s discussion, we’ll explore how we can try to beat Warren Buffett’s achievements. Yes, you can do that. I will show you the magic and strategies to come close to his success, along with some lessons we can learn from him.
Market Overview
Now, where are the markets headed? Markets are definitely headed higher. Despite various challenges like the capital gains tax, the market has brushed them aside and continues to rise. The 25,000 mark is significant, akin to a cricketer approaching a century. We reached 24,999.75 on Nifty but didn’t cross 25,000, eventually coming down to 24,836. This is a natural behavior around round numbers in indices and stocks due to human psychology.
Nifty Next 50
Nifty was flat, but Nifty Junior saw a nice rise, closing near an all-time high.
Nifty Mid and Small Cap
Mid caps closed at a new all-time high, up 0.94% at 21,006, and small caps also closed at a new all-time high, up 1.07%. This is a flip from a few days ago when mid and small caps were stagnant while Nifty was moving. Today, Nifty was flat, but mid and small caps moved up.
Nifty Bank Overview
Bank Nifty saw a significant movement with a 1000-point range but ended with only a 0.22% gain. Although it is the weak link, it still holds above the election day highs. Additional liquidity requirements in banks are said to be hurting them slightly, but they are consolidating well.
Nifty Heatmap
Today’s heat map shows HDFC Bank down by 0.81%, Titan, Bharti Airtel, ITC, Kotak Mahindra Bank, and Axis Bank losing some ground. However, we saw gains in UltraTech Cement, which is taking a significant stake in India Cements, and stocks like L&T, Mahindra, Bajaj Finserv, and Reliance Industries. The larger caps didn’t move much, but mid and small caps had a decent run.
Nifty Next 50 had several stocks moving significantly, with DLF up by 4.8% after reporting fantastic numbers and a promising pipeline of real estate launches.
Sectoral Overview
Sectoral trends show PSU banks standing out with a 2.3% gain, real estate up by 1.4%, and public sector enterprises contributing with a 1.2% gain. Other sectors were muted, with consumption, FMCG, and IT taking a break.
Sectors of the Day
Nifty PSU Index
PSU banks faced resistance at this point after rallying from 4000 to nearly 7400 since last August. This election day was a blip, and we are still below the election day high, but PSU banks may form a base here and break out later.
Stocks of the Day
RITES
Stocks like RITES Ltd. saw a 14% rise, creating a flag pattern. The rally from Rs 200 to 759 in the last one and a half years reflects the significant liquidity in the market. This liquidity, akin to doubling the water in a pond, has lifted all asset bases. Historical levels might shift, and new benchmarks will be made.
Story of the Day : Can you beat Warren Buffet?
Coming to Warren Buffett, he is the master of compounding, having compounded his wealth over nearly 80 years. Most of his wealth was made post the age of 60, showing the power of compounding. His returns are not out of reach but require consistency, dedication, and a long-term approach.
In the last 20 years, Berkshire Hathaway has achieved a CAGR of 10.59%, while the S&P 500 has done 8.29%. Nifty in USD terms has done 11.25%. This shows that even index returns in dollar terms come close to Buffett’s returns. The longevity and staying in the market are crucial, along with the right behavior and psychology.
Comparing Berkshire Hathaway’s returns to some Indian stocks in dollar terms, we see Infosys up by 1500%, ITC by 1900%, HDFC Bank by 2600%, Asian Paints by 6300%, Page Industries by 9000%, and Bajaj Finance by 58,000%. A combination of such stocks can beat Nifty and Berkshire Hathaway in dollar terms.
Buffett’s approach towards compounding involves not taking money out and spending it, being satisfied with minimal personal expenses, and allowing the number to grow. This has resulted in a 60-fold increase in his wealth post the age of 52.
We can match Buffett’s returns by staying in the market, avoiding mistakes, and maintaining a long-term perspective. Time in the market trumps outperformance by a wide margin, and with a similar approach, we can achieve substantial growth in our portfolios. Even with normal returns, the exponential growth curve can work in our favor if we give it enough time.
