Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
While we can’t say who performed better in reel life, Indian stock markets have their own SALMAN and HRITHIK and it is the former who has been able to top the latter in financial year 2021.
SALMAN and HRITHIK are actually acronyms and are used to refer to a set of stocks. Often, they are used to convey the idea of a theme in flavour.
The trend began with FAANG in the West which stands for a group of US technology giants that are changing the world, namely, Facebook, Apple, Amazon, Netflix and Google.
In the domestic markets, SALMAN stocks comprise of State Bank of India, Axis Bank, Larsen and Toubro, Maruti Suzuki, Adani Ports and NTPC.
The other set under the acronym HRITHIK — comprises of HDFC Bank, Reliance Industries, ICICI Bank or ITC, Tata Consultancy Services, HDFC Ltd, Infosys Technologies and Kotak Mahindra Bank.
According to experts, it is not uncommon to hear traders and investors converse in the lingo when discussing market movements and their bets and acronyms have become easier to remember and discuss market momentum.
The outbreak of COVID-19 has changed the lives of people across the globe and so has their portfolio allocation. Smart money has moved into stocks or sectors that are likely to benefit from COVID or could be recovery plays.
In this context we checked the performance of both set of stocks in FY21.
HRITHIK
| Company | 01/04/20 | 31/03/21 | %chg |
| HDFC bank | 829.7 | 1493.55 | 80.01 |
| RIL | 1080.65 | 2003.2 | 85.37 |
| INFOSYS | 604.1 | 1367.75 | 126.41 |
| TCS | 1709.55 | 3177.6 | 85.87 |
| HDFC Ltd | 1584.4 | 2498.95 | 57.72 |
| ITC | 166.35 | 218.5 | 31.35 |
| Kotak bank | 1182 | 1754 | 48.39 |
| Average | 73.59 | ||
| SALMAN | |||
| Company | 01/04/20 | 31/03/21 | %chg |
| SBI | 186.6 | 364.35 | 95.26 |
| Axis Bank | 358.45 | 697.5 | 94.59 |
| L&T | 774.75 | 1418.35 | 83.07 |
| Maruti | 4243.6 | 6859.75 | 61.65 |
| Adani Ports | 244.9 | 702.75 | 186.95 |
| NTPC | 81.1 | 106.45 | 31.26 |
| Average | 92.13 |
In FY21, clearly Adani Ports has lent support to SALMAN stocks by giving 186% return to investors. Apart from this SBI, Axis Bank and L&T have almost doubled investors’ wealth which led to the outperformance.
Most experts suggest creating a portfolio of stocks which stand the test of time. The companies which have good cash flows, higher profitability, dependable balance sheets, management capabilities to wither downtrends, etc.
While both SALMAN and HRITHIK group of stocks have given robust returns in FY21 and have both outperformed the benchmark indices in the same duration, SALMAN has been able to nearly double investors money in just last one year.
Experts say going forward one must stick to stocks which can benefit from the economic recovery and not chase the stocks which have run up sharply.