Investing in India

During an inter-corporate competition in 2003 at Bengaluru, one of my responses seemed to have worked in my favor to be selected as a finalist in ‘Mr. Silicon Valley’ (I was part of the winning team in ‘Dumb charades’). It was similar to these ‘public contests’ where we had to complete the slogan and I had to complete ‘Money is …’. I wrote ‘Money is something but not everything.’ On stage, the judges apparently impressed on my response, asked me to further elaborate on my ‘point’. That was the point. I was not making a point! I just wrote what I felt.

It is no trick to make a lot of money, if all you want is to make a lot of money

Indeed I have felt this to be a truism, because the key is ‘all you want’. It is one thing to simply talk and another to walk the talk. With two of my classmates – Raghu Ganesh and MV Varadarajan, we initially did dabble with a measly amount of Rs.3000/- each. Apart from the fact that I contributed in the form of donation rather than real investment, I also did not like ‘trigger happy’ investment, buying and selling based on mood or paranoia. I did not want to invest as a ‘non-serious’ person. I wanted to start my serious investment at the time of resigning from my first job at Texas Instruments which coincided with the IPO announcement of TCS. All my sisters were married then and now I could afford to ‘risk’. In fact that was another reason why I resigned. I always liked tall people in corporate world, who don’t come in TVs and never give ‘media bytes’. TCS and CTS fell in that category.

Also given my visit abroad and the phase that India was in, at that time, I was more convinced that Indian business will show rapid progress. Apart from the fact that I had minimal expenses and that I had entered in to a home loan for purchasing a flat in Bangalore, I really went full length into IPOs and chose LKP for my demat account because they were the only ones who were willing to do it real quick. Other traders/investment companies asked me to come after a week, submit documents which I felt were irrelevant. Anything other than my PAN card is irrelevant for investment. I never wanted to dabble in the secondary market, despite so much of ‘prompting’ from LKP. For one, I did not intend to monitor the stock markets 365/24/7 and I did not want to get distracted from my job, which I was convinced, was my bread winner.

I don’t have any great philosophy behind carrying minimal cash. In fact when a thief broke into our house and stole the purses of my friend, my sister and mine, he would have gone Rs.4000/- or more from my friend’s purse, but would not have got more than Rs.15/- from mine ;) I thought that money in the form of money, i.e. currency is just garbage. That was another reason why I went into purchase of flat. It should be in different ‘forms’, which have differing levels of liquidity. Currency is ‘instant’, shares takes a bit of time, gold even more and fixed assets would take the maximum time. I believed that bulk of the finances should be in this ‘intermediary’ form, i.e. shares/mutual funds/gold.

I followed my ‘internal voice’ in choosing the IPOs and am not flippant. Given the political climate and trend, I was convinced that I can readily invest in ‘disinvestment’ IPOs. Though I sensed Depression which had effect on my ‘career’, I knew that my portfolio can only get a boost. Thus some of my stocks which were performing below par till say 2007 or 2008, have performed exceeding well in the last one year and my whole portfolio has shown 80% growth as on date. With an investment of more than Rs.1.2 million, that is a reasonable ‘success’ according to me. Indeed my recent investment in Coal India has met with an allotment of 199 shares. Hindu’s editorial just reaffirmed my opinion as far as Coal India is concerned that there is indeed a digging for value.

Coal India's initial public offer (IPO), which opened for public subscription on October 18, is expected to fetch over Rs.15,000 crore, making it by far the largest public offer ever made in India. Coal India is the only Navratna that has remained unlisted, and its entry into the capital market has been welcomed with a rare degree of unanimity by a wide range of analysts and investment bankers. Three of India's credit rating agencies have accorded the highest rating to the offer.

I am not sure of how this ‘IPO honeymoon’ is working in India. Especially when there is so much talk of recession, it really looks like the gap between haves and have-nots is increasing. I don’t see the reason why they increased retail investment cap in IPOs.

(Sebi) today raised the investment limit for retail investors in an initial public offering (IPO) to Rs 2 lakh from Rs 1 lakh earlier even as it tightened norms governing the preferential issue of equity shares.

Already there is this comedy called HUF (Hindu Undivided family) and people are misusing this to the core. The increase of ‘retail investment cap’ is only playing to this gallery. I don’t know when or how soon will see the 'militant' reaction of the haves vs have-nots in India.