Indigenous Investors Weekly Insights!
Top 3 well curated stories from the stable of Indigenous Investors incase you missed them. These can range from finance to sports, depends on what made the headlines. Stay tuned.
This week, we cover the following:
Is the gold price rally losing steam after soaring 42% in a year?
The Big Boss returns: HDFC Bank shares hit record high post Q4!
BYD Semiconductor Deep Dive
Our thoughts are with the victims and their families of Pahelgam terror attacks.
Prime Minister Narendra Modi has taken a landmark decision by suspending the Indian Water Treaty. Yes, it will take a decade for the water to completely stop but the intent is clear - India will not negotiate with Pakistan who nurtures such terrorists.
Next few days will be crucial as India retaliates.
Since this is a financial newsletter, we will focus on how you should look at the Indian equity markets during the course of this terror episode playing out.
If you want us to publish some sector specific indices that you would like to read on a weekly basis, please write to us in the comment below.
Unlike last week, this week saw a muted growth. And yes, the reason is not Pehalgam terror attack that some media houses will want you to believe (because its easier to blame something than doing an extensive analysis).
The reason for this muted growth is Q4FY25 results for Jan to March 2025 period for companies. Along with this, companies will be publishing their Yearly numbers which will throw a light on how the year went and guidance for the next year.
So here’s the big question of the hour!
Foreign Institutional Investors will pull their money out! or they won’t?
Yes, large investors like to invest in countries where there is peace. But that’s not completely true. Otherwise Japan’s equity markets would’ve been the greatest compounding machine for last few decades.
Investors tend to look for economic activity.
India with its young population (touted as demographic dividend) offers them just that. Plus, we are a consumption machine.
Just look at the soda beverages space for instance.
For years it was believed to be an oligopoly market where only products from Pepsi and Coke competed with each other. But now, we are seeing Campa Cola slowly addressing the system with it’s low price alternative.
Quick commerce companies like Blinkit, Zepto, etc are now absorbing low skilled youth by offering them a respectable job. Some of these people who scrape through by making a mere Rs 30,000 per month have now started investing Rs 500 to Rs 1,000 in mutual funds and are now looking to build a corpus of their own.
We can go on and on …..
In a nutshell, don’t fall for this greater fool theory of FIIs or FDIs pulling their money out from India.
We might see a knee jerk reaction, but the long term growth is intact. Unlike Pakistan.
Story #1: Is the gold price rally losing steam after soaring 42% in a year? (click here)
Gold touched the magical number of Rs 1,00,000 this week. And now it’s slowly correcting.
This year, as we onboard investors to our services, we are always asked this one pertinent question - why don’t we invest in gold instead?
One particular investor told me that she wants a higher return in mutual funds compared to what she made in gold last year.
Honestly, it was a lucky fluke for her. But now the expectations are set at 40% returns from the equity markets. And that’s where we had to politely deny her and ask her to look for someone who can consistently pull a rabit out their hats. Because we can’t.
Gold is a currency for uncertainties and a strong financial product.
Yet, we Indians attach an emotional value to Gold. For us it’s a matter of pride. So selling it to book profits might not really happen.
If you’re building a retirement corpus, we still believe equity is a better way forward.
Story #2: The Big Boss returns: HDFC Bank shares hit record high post Q4!
Those of you who know us, know our passion and affection for HDFC Bank. It’s a powerhouse.
We were repeatedly being questioned on our decision to recommend this stock to our investors when it wasn’t moving. There were some new age analysts who said that the era of making money from the banking sector is over. Honestly, when the stock doesn’t move as we expect it to, everyone believes.
But we were sure about our anchor position in the bank.
Stock price was affected by a merger of HDFC Ltd and HDFC Bank because it takes time for the company of more than 1 lakh people to come together and work. It’s not a switch unlike most analysts believe it to be.
Secondly, the craziness of personal loans that was built into the system. RBI had to take several steps to correct this issue where most NBFCs were offering personal loans at ridiculous rates and deadly terms.
HDFC Bank stayed away from it. And once again were proven right in their prudent banking approach.
Inflation too played a crucial role in keeping the interest rates (cost of money) up. Hence, credit was expensive for a long time. That is now showing a sign of reversal and helping the banking sector improve their numbers.
We are anticipating a blockbuster earnings session from the entire banking sector now. And yet we are highly comfortable with the largest player in town.
Story #3: BYD Semiconductor Deep Dive
As BYD enters the streets of Mumbai, we can’t help but notice the classy design in an noiseless electric car. Honestly, the car looks sexy!
Hence, we thought to take a quick look at the company and found this interesting piece that we would like to share with you.
BYD, originally a battery manufacturer founded in 1995, has evolved into the world’s largest electric vehicle (EV) producer, delivering over 4.27 million EVs in 2024—more than double Tesla’s output.
Central to its success is deep vertical integration, with BYD manufacturing most of its EV components in-house, including semiconductors through its subsidiary BYD Semiconductor.
Established in 2002, BYD Semiconductor transitioned from a fabless battery IC design firm to a full-fledged integrated device manufacturer (IDM) after acquiring TSMC’s old fab equipment in 2008.
It now operates multiple semiconductor plants across China, producing key EV components like IGBT chips, SiC modules, MCUs, sensors, and optoelectronics. Power semiconductors, particularly IGBT and SiC devices, are a strategic focus due to their importance in EV performance.
In China, BYD has already overtaken Infineon as the top power module supplier, signaling a shift in global semiconductor dynamics. Its ability to tightly integrate chip development with vehicle design gives it a unique edge in performance, cost, and innovation in the EV race.