2008 went down as one of the worst years for equity markets not just for India but for the entire world. Nearly 40 percent of investor wealth was wiped out in a matter of days soon after Lehman Brothers declared Bankruptcy in September 2008.
The fall, which started in August 2008 took Nifty from levels of 4,500 to 2,261 by October 27. Indian market bottomed out in October 2008 and has since then rallied over 400 percent, while there are many stocks which have given 10,000-50,000% returns since then.
Interesting? Right!! Well, much of the carnage that happened was due to external factors and there was nothing fundamentally wrong with our economy or companies. Smart investors stayed with their bets while the rest buckled under pressure and booked losses.
Little did anyone know that Rs 20,000 invested during 2008 fall could have made investors crorepati in 10 years. Data from AceEquity suggests that as many as 15 companies gave 10,000-55,000% returns in the last 10 years.
Kshitij Anand
Associate Editor
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Stocks which gave multibagger returns include Tasty Bite, Symphony, Bajaj Finance, Relaxo Footwear, Safari Industries, Avanti Feeds, Astral Poly, Eicher Motors, Ajanta Pharma, La Opala, Vinati Organics, Natco Pharma.
“In FY08-09, during the global crisis, the equity markets fell by about 39%. While an investment in gold went up by almost 24%. The situation reversed the next financial year FY2009-10, with equities rising 94% and all other asset classes giving lackluster returns,” Arun Thukral, MD & CEO, Axis Securities told Moneycontrol.
“The 2008 crisis did provide an opportunity to buy. In the past 10 years, Bajaj Finance has multiplied by 219 times, Eicher Motors by 72 times, and MRF by 21 times. However, timing the market is a difficult practice, hence we should look at returns of longer periods to factor the volatility of the equity market,” he said.
The Lehman Brothers bankruptcy was 10 years ago but the lessons learned are still valuable for every investor. For many of us in India, the developments in the US were difficult to understand as foreign investors (FIIs) started dumping equities.
Some experts recall the horror that that seen in 2009. The corporate earnings and domestic economy were strong and even the local investor sentiment was upbeat, but equities were crashing – that was a scenario in which most investors and traders have to comprehend with.
“I learned more about the global economy, its interconnected nature and the impact of “Wall Street” on “Main Street”, than all the decades of learning before that. Since we were engaged in trading and arbitrage, daily profits soared due to high volumes and a secular downward trend which provided an ideal trading opportunity,” Dipan Mehta, Member BSE, NSE share his experience.
“What worked was if an investor did not indulge in panic selling and held on to quality stocks, then the prices recovered well from March 2009. However, portfolio values were sharply eroding and that was distressing,” he said.
Mehta further added that the crisis taught me to avoid leveraged positions, invest in quality stocks, diversify the portfolio and remain invested through a global crisis.
The lesson was indeed valuable for investors who held on to their investments. Data suggest that as many as 449 companies gave over 1,000%-10,000% return in the last 10 years which include names like JBM Auto, Balkrishna Industries, Indo Count Industries, V-Guard, VIP Industries, IFB Industries, Atul Auto, Venky’s India, Muthoot Capital etc. among others.
