Why I'm buying IPOs, Unlisted and SME IPO stocks | Akshat Shrivastava

Summary

In this video, investor Akshat Srivastav discusses the sentiment-driven nature of the Indian stock market, highlighting the disconnect between stock prices and fundamentals, exemplified by Ola Electric. He emphasizes the importance of understanding sentiment investing and suggests exploring unlisted stocks and SME IPOs as potentially lucrative areas. Srivastav also stresses the need for a balanced portfolio and cautions against blind speculation, offering insights into different investment stages and strategies for risk management.

Takeaways

• 🧐 Mr. Ramdev Agrawal, a renowned investor, is puzzled by the rising stock prices of Ola Electric despite its limited fundamentals.
• 📈 The Indian market has become increasingly sentiment-driven, affecting stock performance irrespective of a company's fundamentals.
• 🤔 The speaker aligns with Agrawal's view, questioning the fundamentals of Ola Electric and the market's current investment trends.
• 🌐 Factors contributing to sentiment-driven investing include retail participation, news manipulation, and domestic institutional investment behavior.
• 📚 It's suggested that even fundamental investors should be aware of and learn about sentiment investing as it's becoming a persistent trend.
• 💡 The video aims to explain why the Indian market is sentiment-driven, the associated risks, and how investors can potentially benefit from it.
• 🚀 The speaker discusses his interest in unlisted stock investing and SME-IPOs, areas where significant money is expected to be made in the future.
• 📉 The example of an auto dealership's oversubscribed SME listing illustrates the current market's high sentiment and speculative behavior.
• 🔢 The high price-to-earnings (PE) ratio of Adani Enterprises, compared to typical industry standards, is cited as an example of sentiment-driven valuations.
• 🎰 The speaker warns that investing based solely on sentiment is akin to gambling and lacks a solid foundation, which could lead to losses in the long run.
• 💼 The importance of understanding the difference between seed-stage startups, SMEs, unlisted companies, and recently IPOed companies is highlighted for effective sentiment investing.

Q & A

What is Mr. Ramdev Agrawal's view on Ola Electric stock prices?

Mr. Ramdev Agrawal, a legendary investor in India, expressed that he could not understand why the Ola Electric stock prices are going up, as he believes it has very limited fundamentals.

What does the speaker believe about the current state of the Indian market?

The speaker believes that the Indian market has become very sentiment-oriented in recent years, possibly due to factors such as excessive DII or domestic institutional play, participation of retail investors, and manipulation of news.

What is the term used to describe investing based on the prevailing sentiment rather than fundamentals?

The term used is 'sentiment investing', which the speaker suggests that even fundamental investors need to be aware of and learn about.

Why does the speaker think that unlisted stock investing and SME-IPO investing are areas to focus on?

The speaker thinks that these areas are where a lot of money will be made in the future, regardless of the current sentiment-driven nature of the Indian market.

What example does the speaker provide to illustrate the sentiment in the market?

The speaker provides the example of an auto dealership in NCR that went on to list on the SME exchange, attempting to raise 12 crore but receiving bids of around 450 crores, indicating massive market sentiment.

What is the speaker's opinion on Adani Enterprises' PE ratio?

The speaker believes that Adani Enterprises' PE ratio of around 80 plus is 'absolutely crazy' for a large-cap company involved in infrastructure, which typically should not command more than 35.

What investment did the speaker make last year that resulted in significant profits?

The speaker made investments in small-cap stocks, specifically mentioning small cap 250, which resulted in a 90% profit within a year.

What are the three key reasons the speaker mentions for why a stock runs?

The three key reasons are fundamental reasons (sales, revenues, and profits growth), technical reasons (such as strong technical patterns), and sentiment (people following the trend due to positive or negative sentiment).

What is the speaker's advice on building a portfolio for investors interested in sentiment investing?

The speaker advises to first understand the risk, learn how to create a balanced portfolio, and then explore options such as SME IPOs and unlisted stocks, while ensuring that it fits with one's overall portfolio strategy.

What approach does the speaker suggest for investing in companies that have recently gone public (Stage 4 companies)?

The speaker suggests waiting for the initial sentiment euphoria to die down, allowing for price discovery to occur, which usually takes about one to one and a half years, before considering investment in such companies.

How does the speaker describe the current sentiment towards electric vehicles (EVs) in the market?

The speaker describes the sentiment towards EVs as 'massive bullish sentiment', suggesting that the market cap of companies like Ola Electric does not make sense in comparison to established companies like Hero Motocorp, indicating a sentiment-driven valuation.

Outlines

00:00

📈 Sentiment-Driven Investing in the Indian Market

The video discusses the sentiment-driven nature of the Indian stock market, highlighting the case of Ola Electric's stock prices, which have risen despite limited fundamentals. The speaker, Akshat Srivastav, aligns with investor Mr. Ramdev Agrawal's skepticism but acknowledges the market's current trend. He emphasizes the importance of understanding sentiment investing, given the Indian market's shift towards it over the past few years, influenced by factors like domestic institutional investments, retail participation, and news manipulation. The speaker also touches on his own experience with small-cap stocks and the potential of unlisted stocks and SME IPOs as areas for future profitable investment.

05:04

🤔 Understanding the Roots of Sentiment-Driven Market Behavior

This paragraph delves deeper into the reasons behind the Indian market's sentiment-driven behavior, pointing out the significant role of domestic institutional investors (DIIs) and retail investors post-2020. It also discusses the limited efficient, after-tax investment options in India, such as fixed deposits (FDs) and public provident fund (PPF), which have become less attractive due to low returns compared to inflation. The speaker suggests that this lack of viable investment options is pushing investors towards the stock market, despite the risks associated with sentiment-driven investing.

10:06

🚀 Exploring Opportunities in Sentiment-Oriented Investments

The speaker outlines strategies for those interested in sentiment-oriented investing, starting with the importance of understanding risk and building a balanced portfolio. He introduces different stages of companies, from seed-stage startups to companies about to go public, and advises against angel investing for most retail investors. Instead, he suggests considering investments in SMEs, SME IPOs, and unlisted companies, providing examples of potential returns and emphasizing the need for careful selection and risk assessment.

15:09

💡 Navigating the High-Risk, High-Reward World of SME and Unlisted Investments

The paragraph focuses on the potential of investing in SME IPOs and unlisted companies, illustrating the high-risk, high-reward nature of these investments with examples of companies that have provided significant returns. The speaker shares his personal involvement in such investments and provides guidance on where and how to find opportunities in this space. He also discusses the importance of waiting for the right moment to invest in recently IPOed companies, suggesting a wait-and-see approach for price discovery post-IPO euphoria.

20:12

📚 Learning and Leveraging Sentiment Investing in India

In the concluding paragraph, the speaker stresses the importance of learning about sentiment investing and not avoiding it, as there is much to gain from understanding this aspect of the market. He advises building a solid foundation in portfolio management before venturing into sentiment-driven stocks and outlines the different stages of companies that can be considered for investment. The speaker also promotes his member community as a resource for further learning and staying informed about investment opportunities in the sentiment-driven Indian market.

Keywords

💡Sentiment Investing

Sentiment investing refers to making investment decisions based on the prevailing emotions and opinions of investors in the market, rather than on a company's financial performance or fundamental analysis. In the video, the speaker discusses how the Indian market has become sentiment-driven, with stock prices of companies like Ola Electric rising not due to strong fundamentals but because of market sentiment. The speaker suggests that even fundamental investors need to be aware of and understand sentiment investing.

💡Fundamental Analysis

Fundamental analysis is a method of evaluating a security's intrinsic value by examining financial statements, management, industry position, and other internal and external factors. The video emphasizes that despite the current sentiment-driven market, fundamental analysis remains crucial for long-term investment decisions. Companies with strong sales, revenue, and profit growth are highlighted as fundamentally strong, contrasting with sentiment-driven stocks.

💡Technical Reasons

Technical reasons in investing relate to the study of historical market data, primarily price and volume, to predict future market trends. The script mentions technical patterns as a reason why certain stocks like Kotak Mahindra Bank may experience price increases, independent of the company's underlying financial health or market sentiment.

💡Domestic Institutional Investors (DIIs)

Domestic institutional investors are investment institutions based in the investor's home country that invest in the local stock market. The video script suggests that the rise of DIIs has contributed to the sentiment-driven nature of the Indian market, as their investments have a significant impact on market trends and stock prices.

💡Retail Investors

Retail investors are individual investors who invest in financial markets for their personal accounts. The script points out the increasing role of retail investors in the Indian market, which has led to a rise in sentiment-driven investing as these investors are more likely to follow market trends and react to news and social media influences.

💡SME-IPO Investing

SME-IPO investing refers to the act of investing in the initial public offerings (IPOs) of small and medium enterprises (SMEs). The speaker discusses the potential for high returns in this area, despite the high risks involved, and contrasts it with the sentiment-driven investments in companies like Ola Electric, suggesting that SME-IPOs might offer more sensible opportunities for investors seeking high growth.

💡Price Discovery

Price discovery is the process by which the market determines the market-clearing price of a security. In the context of the video, the speaker advises waiting for the initial sentiment-driven euphoria around an IPO to die down, allowing for price discovery to occur, which can lead to more realistic and potentially undervalued stock prices that may offer better investment opportunities.

💡Portfolio Building

Portfolio building involves the process of selecting and combining various types of investments to achieve diversification and meet specific financial goals. The video emphasizes the importance of understanding portfolio building before engaging in sentiment investing, to ensure a balanced approach that mitigates risk and aligns with the investor's risk appetite.

💡Risk Appetite

Risk appetite refers to an investor's willingness to take risks in the pursuit of higher potential rewards. The script discusses the importance of assessing one's risk appetite when considering sentiment-driven investments, as these types of investments can be highly volatile and may not be suitable for all investors.

💡Unlisted Companies

Unlisted companies are those whose shares or securities are not traded on a public stock exchange. The speaker mentions unlisted companies as a potential area for sentiment investing, particularly those that are about to go public, as they may offer opportunities for gains before the broader market sentiment impacts their stock prices.

💡IPO

An IPO, or initial public offering, is the process by which a private company becomes public by offering its shares to be traded on a stock exchange for the first time. The video script uses the example of the LIC IPO to illustrate the potential pitfalls of investing in sentiment-driven IPOs, where the initial hype may lead to inflated prices that do not reflect the company's true value.

Highlights

Mr. Ramdev Agrawal, a legendary investor, questions the fundamentals behind Ola Electric's rising stock prices.

The Indian market has become increasingly sentiment-oriented in recent years, affecting stock performance.

Sentiment investing is becoming a significant aspect of the Indian market, necessitating awareness and understanding.

Investors are advised to consider unlisted stocks and SME-IPOs as areas with potential for future gains.

The case of an auto dealership in NCR listing on the SME exchange and receiving an overwhelming response exemplifies market sentiment.

Adani Enterprises' high PE ratio, despite being in infrastructure, indicates sentiment-driven valuations.

Investor Akshat Srivastav discusses his own experience with small cap stocks and the significant profits made within a year.

Akshat emphasizes the importance of learning about sentiment investing and incorporating it into investment strategies.

Fundamental, technical, and sentiment reasons are identified as the three key drivers behind a stock's performance.

The rise of domestic institutional investors (DIIs) and retail participation is changing the dynamics of the Indian stock market.

Limited efficient, after-tax investment options in India are pushing investors towards the stock market.

The video discusses the importance of risk assessment and portfolio building for investors interested in sentiment investing.

Different stages of companies, from seed stage to recently IPOed, are outlined as potential areas for sentiment-driven investing.

Akshat shares his personal approach to investing in unlisted companies and SME IPOs, highlighting the potential for high returns.

The video concludes with advice on waiting for the sentiment euphoria to die down post-IPO before investing in stage 4 companies.

Akshat invites viewers to join his member community for further insights on portfolio building and investment strategies.

Transcripts

Hi everyone. Welcome to today's video.

So recently, Mr. Ramdev Agrawal, who is a legendary investor in India, he said that

he could not understand why the Ola Electric stock prices are going up.

It has very limited fundamentals.

But despite his view, the stock kept on running and it has

given very good run-ups.

Now, I am also in Mr. Ramdev Agrawal's camp.

I do not believe that Ola Electric has any good fundamentals going for it as of now,

but Haawa Haawa bazi, it is running like anything.

What I've come to realize is that Indian market has become very sentiment-oriented

over the last in a few years.

This might be due to excessive DII or domestic institutional play or

participation of the retail, janta, manipulation of the news,

a bunch of different things.

But the point is that even fundamental investors like you and me need to be aware

that there is something called a sentiment investing.

Probably it's time that we start learning about it and acknowledge the fact that,

you know what, boss, this type of stock investing is here to stay.

On this video, I'm going to help you decode why I feel that Indian market is

absolutely Absolutely sentiment-driven right now, what is the risk associated

with it, and how is it that you can benefit.

More precisely, I will talk about unlisted stock investing.

Why am I picking some stocks there?

Why I have started to look into IPO investing, SME-IPO investing.

All these are areas There are a lot of money will be made in the future, whether

we like it or not, whether we keep on saying, fundamentals, this that stuff,

because absolute crazy stuff is happening in the Indian market.

Just for context, take a look at this picture.

Here, what has happened is there is an auto dealership in NCR.

It is one shop dealership..

Now that company went on to list on SME

exchange and it was trying to raise 12 crore, only 12 crore money.

The amount of bids that it received was crazy.

It received roughly around like 450 crores, something around that.

I'm just trying to recollect it from my memory.

The point I'm trying to make is that there is massive sentiment that

is going on in the market.

On top of this, there are listed companies, for example, Adani enterprise.

If you look at its PE, it is around like 80 plus.

Now this is absolute crazy PE for a large-cap company like Adani enterprise,

which is mostly into infrastructure play.

You just Google it and you yourself will see that infrastructure companies should

not typically command more than 35 fee.

But Adani enterprise is commanding absolute crazy fee.

Why? I don't know why, right?

Because it is probably sentiment-driven.

So the point is that people like me can keep on bashing Adani enterprise, Ola

Electric, SME stocks, this, that stuff.

But boss, these stocks are running and we have to understand that, okay, this is a

style of investing that we probably need to learn.

Now, a part of it I had exhibited last year when I picked up a lot of small cap

stocks, and precisely, I invested in small cap 250.

It was a low risk bet back in the day.

And within a year, I was able to make 90% profits.

A lot of students from my community made very good returns.

community members will write as well in comments.

Now there, that was a sensible bet. That was a low risk bet.

So is this type of an investing that we can do in high growth assets like

Unlisted, market, small and medium enterprise IPOs.

When it comes to companies like Ola Electric, what are some key things

that we need to keep in mind? I will talk in four or five simple points.

Now, in case you're new to my channel, my name is Akshat Srivastav.

I am a full-time investor.

I travel across the globe.

I study the investment domain.

I talk to a lot of HNI's rich people, try to understand their perspective, how they

are investing, and bring that knowledge for you.

I also run my hedge fund.

I'm currently in my home city, which is Gwalior, but I mostly

spend my time in Dubai.

I will also make a separate video on that. Why is that the case?

So I spend roughly six months in Dubai and four months in Goa, which is my home.

So this is my lifestyle.

And roughly two, two and a half months, I travel across the world understanding

the investment landscape.

So back to the video.

The first key point that you need to understand is that there are three

key reasons why a stock runs?

The first key reason is fundamental reason.

Now, fundamental reason means that sales is growing, revenues is growing, profits

is growing, and therefore the stock price is going.

That is called as fundamental analysis.

Now here, for example, if you study private banks right now, now those are

fundamentally sensible levels right now. Why?

Because the revenues have almost doubled for HDFC Bank, Kotak Bank

in the last four years.

Profits have almost doubled or tripled, but the stock price has hardly moved.

So these are fundamentally strong stocks.

This is precisely what is the meaning of fundamentally good companies.

Now, it is now on your conviction level, your understanding of the stock market,

whether you pick these type of bets, how do you pick it?

Etc , etc.

Now, in case you guys are interested, I do offer courses.

I do offer a community where serious investors get together,

understand things from each other.

So in case you guys are interested, you can check the links in the

description and comment box.

But this is the first reason why fundamentally good companies move

because the fundamentals are very strong.

This is reason number one.

Reason number two are called as technical reasons.

For example, if you go and see, Kotak Mahindra Bank technical pattern, it

is a very strong pattern right now.

As per There is a good 30 to 50% gain that is likely to happen on Kotak Mahindra

Bank just based on technicals.

Again, I'll not be able to cover on one single video.

I'm trying to give you a broader perspective, but I hope that there are

something called as technical patterns that you are able to at

least understand right now.

Now, the third key reason is very weird.

It is called a sentiment.

Now, sentiment simply means because something is running, people run

after it and it runs even more.

Now, this is sentiment-driven investing.

This happens at a broad market level also..

Everyone panicked.

Everyone started selling.

As more people sold, more people joined the bandwagon, and the stock market

got beaten down by roughly 40%.

Something similar happened in 2008.

That big institution started selling.

Then retail people joined the force.

Everyone sold, and the market fell by 70%, or 66% more precisely.

So this is negative sentiment.

Now, positive sentiment can also happen.

For example,.

Waaree renewables Now take a look at this.

It's not as if this was a fundamental play.

This was This is the sentiment play.

Take a look at this chart again.

This is for BCG or Brightcom Group.

Now, again, this company just went up in the air because of sentiments.

You'll see on Twitter, people keep on saying, Oh, what company is it?

This is a good company. This is that stuff.

People jumped and the stock started running upwards.

Now it has corrected drastically.

But the point is that positive and negative sentiments work

in the stock market.

And these type of sentiments are exploited by a lot of founders as well.

For example, just like electric. It is not all about ev.

That is not how it is going to happen.

Just think, logically, that for example, if there are 1,000 conventional cars,

Let's work with a simple example.

There are only 1,000 conventional cars in India right now.

What do you think is going to happen when EV takes over and kicks out all those

conventional cars or conventional bikes, et cetera?

It's not as if just because there are 1,000 now.

Now, suddenly, because there is EV, everyone will start using EV only.

Instead of 1,000 EV vehicles, we will have 500 million EV vehicles all of a sudden.

No, nothing of that sort.

The total market size of these vehicles will remain the same.

It's just that that conventional automobile wheels or conventional two

wheelers are going to get replaced by EV.

That is the best case scenario for EV industry.

That's it.

Now, on that note, take a look at market cap of Ola Electric.

You will see that it is almost at half or 50% that of Hero Motocorp.

The company got started in 1980s.

Name changes frequently.

Now it is all over the place right now.

The business model is also not figured out.

Yes, there are a lot of good things that are happening with Ola Electric, but

giving it half the market cap, that of Hero Motorcorp makes no sense whatsoever.

To cut the long story short, what is happening with companies like Ola Electric

right now is that they are in massive bullish sentiment.

If you have benefited from the stock, congratulations.

You have won a gamble, you have won a lottery.

There is no problem in that.

But if you adopt this system of gambling consistently on 10 different stocks, I can

guarantee this to you that you will lose money eventually in this game because

there is no head or leg to investing in sentiments per say.

So that brings us to the second key point that, okay, why is it that the sentiments

are so high in the Indian market?

There has to be some logic to it, right? Okay, fine.

There is. So there are two, three reasons for this.

The first key reason is that see, after 2020, there has been a massive rise of

DII money in the Indian stock market.

In fact, for the last four years, FIIs haven't really invested

in the Indian market much.

They are net sellers in the Indian market.

It's mostly the DIIs or domestic institutional investors who have put in

the money in the Indian stock market.

So this is part one of this reason.

Part two is massive rise of retail.

So from 2020 up until now.

In fact, 2024 is again proving to be a great year for retail investors because

fundamental investors made very good money in 2020, 2021, 2022, when

the markets were cheap.

In fact, my entire community invested crazy amount of money in

2021, 2022, 2023, some part.

And 2023, and onwards, we have started slowing down.

Now, the reason is that that was a very good fundamental buy..

For example, I myself made close to 100% run up on a bunch of different stocks.

it was jeevan small finance, or it was Equitas small finance, if it was Voltas,

chai, it was Meta, and a bunch of different, different.

I will not get into that.

But the point is that even from a broad market perspective,.

Of course, any investor who is picking like 10, 20 stocks, some stocks will go

sideways, some stocks will run up, some stocks will go down.

Take a look at this portfolio.

This is a public portfolio I had made on mutual funds.

This was roughly done one and a half years ago.

This portfolio, this is a fairly big portfolio, a decent-size portfolio,

entirely built in public.

You discuss the Cagr.

It's a Cagr. It's a Cagr.

It's a X-I-R-R.

So this I'm paying close to zero % commission on it.

Mostly it was built by using index.

The first key reason why Indian market is being driven by sentiments is excessive

participation of DIIs and retail Janta.

The second important reason is that in India there are very limited, efficient

after-tax options when it comes to investing.

Now, what is the meaning of that?

See, in 2023 budget, what had happened was that the indexation benefits

of debt was taken away.

Bonds, if you invest, there is a little loss there.

Similarly, if you check the FD rates, now FDs will typically pay like 6, 6.

5, 7%. Now after tax, it comes out to be 4.

5, 5%. Now what is the inflation in India?

Official inflation usually is between 3-6%, which is the target

rate of inflation for RBI.

If inflation itself is hitting 6%, you are making 4.

5% after tax from FD.

It's a dead investment option.

You cannot really invest in FDs.

I'm not saying FDs are bad.

Fds serve a very specific purpose.

But as an investment instrument, it is pretty much pointless.

Same has happened for EPF, PPF, PAF, all that.

In 2001, the EPF, PPF rates were close to 9%, and inflation in the

economy was much lower.

Now, the EPF, PPF rates are somewhere around 8-8.

5%, so that's not a big thing.

Inflation has risen up.

Now, is this an investable asset class?

The short answer, unfortunately, is a no.

Now, many people will come after me,.

But getting after-tax 8% return on a long-term investing instrument,.

What sense does that make?

People are left with no other option but to explore the route of stock investing

because stock investing still is a very good option in India.

Even from a tax efficiency perspective, it is good because last year, before this

2024 budget, the long term capital gains tax on equities was only

10%, now it has risen to 12. 5%.

Even 12.

5%, tax efficiency.

At least you can rotate capital.

So what people have started to do right now is that they have started to

rotate capital really, really fast.

And.

That's a simple point.

Which brings me to the third and final section of the video, which is, if you

want to do this sentiment-oriented investing, what are some key things,

key avenues, key instruments that you can explore?

See, the first key thing is that you need to have a sense of risk.

It's not as if just because SME, IPO, 100% run-up, Ola Electric,

We will not have any core portfolio.

We will not have any FDs.

We will not have any safe money in play.

We will just go and invest money like a crazy person and be done with it.

No, you will go bankrupt.

You will have... Just don't do it.

It's just not worth it. That's simply gambling.

So please have a perspective of risk.

Please invest your money well.

This is literally my pitch number one.

Number two, please learn how to create a balanced portfolio.

For example, in my case, most of my portfolio is core portfolio.

Core, means I have a very good company.

I've already made very good run-up money on it.

Again, this mutual fund picture, for example..

So please learn how to create a balanced portfolio.

If you're just jumping, tomorrow, one month after we will put money here,

there, everywhere. It's just gambling.

It's just not worth it. Please don't do it.

That's my simple pitch. Please learn about portfolio building.

In case you guys are interested, do check it out.

I will teach everything end-to-end, right from real estate investing, stock

investing, and basics of cryptos.

So that will help you understand how to balance your portfolio by

using different asset classes.

So then comes the third key point.

You have understood the risk, you have understood how to cultivate a portfolio,

then what options can you take a look at?

For this, you need to understand the difference between three different types

or rather four different types of companies.

The first type of company is called as a seed stage company or

early stage startups.

It's a new company, small company, and all that stuff.

So that would be a seed stage.

Now, if you are investing money in these type of companies, this is

called as angel investing.

Should you do angel investing? Short answer is a no.

Please don't do it unless money is the only thing that you

can offer to a founder. Why?

Because, for example, when I go to, let's say, Kunal Shahji or some other big guy,

now they are bringing strategic value also.

So the type of valuation I will give them on my company, it is

going to be much better.

But if you are just using random platforms on the internet,.

There is no point in doing angel investing.

This is stage one.

Now the second stage type of companies are called SMEs or small

and medium enterprises.

For example, so earlier in the video, I spoke about an auto dealership.

Yeah, dealership, it's a small business.

That's usually.

Like, it's tough for most of these auto dealers.

So now that is a small and medium enterprise type of a company.

And please notice, I'm saying revenues, not profits, 10, 15 crores

of business, hypothetically. That's usually.

Like, I say,. So these are small and medium enterprises.

I see, Now to invest in these type of companies, yes, you can consider that.

Risk is much higher, no doubt about that, but the risk is lower

compared to angel investing.

So how do you search for it and what are the typical returns that you can make?

So here is an entire list of companies from the SME-APO segment and the

type of returns that they have given.

Just see, you can see that there are a lot of companies.

For example, Oasis, Metal, and Mineral Processing.

Its issue price was 87, and its current price is 1,520.

You can see, and this was listed on fourth Of course, the return is also very

high and risk is also very high.

I'll show you the risk profile.

For example, if you take a look at Galactico Corporate Service Limited,

96% loss was done when they put money.

What I'm trying to tell you is, I'm not trying to tell you a positive

or a negative picture.

What I'm simply trying to tell you is that if you're going to these category 2

type of companies, run up can be a lot.

Maybe if you're putting, let's say, 5% of your portfolio on these type of

companies, it's not a bad idea.

How to select these type of companies?

I'll make a separate video on that. So am I picking it?

Yes, 100%.

I've started to invest some money in SME IPOs.

I feel that this is a good area to investigate from a sentiment investing

point of much better than Ola Electric story.

It's not as if you are getting some crazy gains by going to Ola

Electric and all that stuff.

You are taking crazy risk there also.

If you are willing to take risk, it makes much more sense to take risk here.

That's my simple point.

Again, this is only relevant to certain type of investors.

These are your stage 2 type of companies.

Stage 3 type of companies are called as unlisted companies.

The size of the company has become bigger and they are about to IPO

in the mainstream market.

For example, a classic case study right now would be Swiggy

or something like HDB Financials. Now,.

Similarly, HDP Financial. Now it is backed by HDFC Bank Group.

So we are clean, it's a fraud, it's a nice company from that angle,

corporate governance issues.

And yes, at the time of companies or should retail investors

have some position in it?

I would say yes, because this is a Swiggy business.

It's not as if this is the first time you're hearing about Swiggy.

Similarly, backed by Hdfc bank group.

A lot of sentiments, positive sentiments, and that's why the price will go up.

So should you build some positions again?

In case you're looking to do risky investing, yes, this is a very good area.

In fact, I can tell you that some companies, for example, HDB Financials,

they are much less risky compared to many small cap companies which are officially

listed on stock exchanges in India.

From a risk profile perspective, also these companies make more sense.

Do I invest in this? Yes.

Many of you have asked me, how do we invest in unlisted space?

I'll put a link. This is from InCRED.

Now, in case you guys are interested in investing in unlisted companies, you can

go read the entire report, understand the business yourself, Swiggy business, CSK

business, HDB financial business, SBI mutual fund business.

And accordingly, you can pick some bets in case you guys are interested.

Again, I will write a community note tomorrow on my channel, on my YouTube

member community about SMEs and unlisted stocks.

So hopefully that will give you more clarity.

And in case you guys are interested in building a portfolio, I can talk about

some very specific pointers because I cannot make videos so fast.

So whenever there are certain opportunities, I do talk about

it on my member community.

So these are stage three companies, and I would say that this is a good area that

retail investors could potentially look at if your risk appetite is Then

comes the final stage, and then you have put in your money with a lot of clarity.

At the time of buying the IPO, I still don't buy it because there is just too

much of sentiment play that is happening.

It just does not make sense to pay so much of sentiment premium in these

type of IPO-oriented companies.

Consider, for example, LIC IPO.

Lic IPO, and LIC will be the only company in the world.

Next.

It didn't happen that way.

The performance also hasn't been great.

Bunch of other different problems.

So paying market premium at the IPO stage does not make much sense.

So much better approach to these stage 4 type of companies is that you

wait for the euphoria to die down.

They say, if you are considering, wait for one year, one and a half years.

Look for price discovery to happen.

Price discovery means that you let the stock go.

Now, who want to sell would sell and the sentiments will die down.

So news will die down.

And after that, the stock will reach its actual value at some stage.

And usually it takes one, one and a half years.

And after that, you can expect to make good gains on that stock

if the stock is good.

This is precisely the approach I took with Zomato.

For example, I picked Zomato at roughly 50, 55, and then I exited my

position at roughly 150% gain around.

So that was a very good play.

That was post the price discovery in these stage 4 type of companies.

So this is the approach that I will take.

Just to quickly recap, that Indian market is extremely sentiment-driven.

Should you avoid sentiment investing? Absolutely not.

There is a lot to learn.

I'm also learning with all of you.

Point number 3, you must understand portfolio building first before

experimenting with these type of sentiment-driven stocks.

Please don't just simply buy these. It does not make sense.

See if it fits with your portfolio.

Point number 4, there are four different types of companies here.

Literally, angel investing.

Then comes Then comes unlisted SMEs, then comes SME IPOs, then comes unlisted

stocks, then comes IPO-oriented companies. Which recently IPOed

.

So these are four stages that we can roughly categorize the markets into.

All four would fit into this sentiment bucket.

I am personally building a portfolio in this region as well.

I feel that this is a good area to focus on because Indian markets,

unfortunately or fortunately, will be sentiment-driven for a

fairly long period of time. We have just started to mature.

So there is a lot of money to be made, a lot of sensible money to be made.

If you are reducing your risk and doing this type of investing, in case you are

interested in learning more how I fundamentally pick all these stocks,

what are the pointers that you should look for, I will keep on writing regular

commentary on all these topics on my member community.

In case you guys are interested in joining, do consider joining it.

The link is in the description and comment box.

Thank you so much for watching and I'll see you soon.