Investing @ Rational Equity. Engaged in a titanic struggle against a number.
Mumbai
Joined July 2010
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Index is fine. Time correction has done its job, downside is limited.
The bigger issue is midcaps and smallcaps still priced for the old regime - P/B percentiles in the 80s while large caps have already adjusted. If profit/GDP normalises, that’s where it hurts.
Putting it together - consensus is building 12-13% earnings growth. For that, profit share of GDP has to keep making new all time highs every year. Possible, but that’s the bull case, not the base case.
Base case to me is 8-10% earnings, similar returns. Decent. Not the 2020-24 experience.
Margins and ROEs both at cycle highs, so the margin lever is also done. Whatever growth comes now has to come from revenue. Revenue growth for Nifty 500 has been single digit for a while.
Meanwhile nominal GDP itself is running ~9% because inflation has collapsed. Low inflation sounds great till you remember topline = volume + price. Pricing power is gone across most sectors.
If profit/GDP just stays flat, earnings grow 9%. If it mean reverts even partially, 5-6%
And earnings are starting from a strange place.
Corporate profit to GDP - 5.2%. Highest ever. Was 2.1% in FY20.
Profits compounded 30% for 5 years while nominal GDP did 10%. Banks NPA cycle ending + tax cuts + margin reset. All one-offs. None of them repeat.
First thing to note - market is not cheap. PE is bang at long term average. The “cheapness” is only in trailing returns, which came from 2 years of time correction.
So no rerating kicker available. Returns from here = earnings growth. Nothing else.
Nifty has done nothing for 2 years. Ran the numbers on what that historically means.
Since 2000, whenever avg of trailing 2-10yr returns was this low, next 5 years gave 13-24% CAGR. Sounds like a buy signal.
Except this time the earnings side bothers me. A thread :
In fact silver fell 50 percent and SILJ fell about 35 percent
#Gold & #silver miners just flashed signals not seen since the 2015 bear market bottom. Here's what the smart money is telling us:
The correction everyone fears may already be over.
Gold fell 28% from its Jan top. Historically, that kind of move crushes miners 2x or more — like 2022, when gold fell 22% and miners (HUI) collapsed 44%.
This time? HUI fell only 33%.
That's not weakness. That's the sector being held by long-term, conviction investors — not traders.
The sentiment data is screaming capitulation:
→ Daily Sentiment Index (DSI) hit 14 - near record bearishness
→ Gold Miners Bullish Percent Index hit ZERO - last seen at the 2015 bear market bottom
→ Open interest in gold futures at historic lows
→ Multiple consecutive weekly ETF outflows
→ 20-day MA indicator showing classic positive divergence
Every single one of these, historically, has marked an important bottom.
Silver is sending the same signal.
The big picture thesis remains intact.
The paradigm shift that began in 2020 isn't over — we may be at its most explosive acceleration point.
The crowd is maximally bearish. That's usually when the real money gets made.
Not investment advice.
Nifty Midcap index is at an all time high while Nifty 50 is below the 200 DMA. The last time this happened was never.
Vivek Iyer retweeted
Why Iran's Hormuz toll proposal isn't bluster
Hormuz carries 21 mb/d of oil and LNG
Total bypass capacity: ~5–6 mb/d
The remaining ~15 mb/d has nowhere to go
That gap is the leverage
Vivek Iyer retweeted
India’s IT sector is saturated with AI narrative.
But when we studied what companies are actually doing — talent, delivery models, productivity, and economics — a very different picture emerged.
The next winners in Indian IT are not where most investors are looking 🧵👇
Rare miss by an otherwise astute commentator. NIFTY Smallcap 100 Price to book at 2018 peak was 2x and 2025 trough is 4x. Base rates of success in picking multibaggers are going to be far lower in the next 5 years
