ITC: Tweet Buster: How a demerger can unlock value for ITC shareholders

NEW DELHI: With Nifty scaling fresh all-time highs, investors have once again started to worry over the sustainability of valuations at a time when the earnings outlook looks foggy amid lockdowns. Nifty smallcap and midcap indices also scaled fresh 52-week highs as the broader market continued to outperform.

On Twitter, Zerodha CEO Nithin Kamath groused that the social media platform has rejected his request for a verified account. Hours later, he managed to get the coveted “Blue Tick”.

In this edition of ‘Tweet Buster’ we look beyond memes on

to understand investing strategies to navigate the market.

ETFs vs Index Fund

Radhika Gupta, MD and CEO of Edelweiss Mutual Fund, said it is a myth that ETFs are less risky than an index fund. “These are vehicles. Risk comes from the underlying portfolio.”

International investing

Gupta said Sebi’s circular on enhancing the limits of MFs to invest overseas is very positive as international investing is taking off now. “This move only widens the space for this category to grow, and fund houses to do more in this space.”

Did you know?

Gupta said bond ETFs account for 18% of global ETF AUM, but 37% of 2020 flows, making them one of the fastest growing passive asset classes. “Passive is not just equity!”

Buy call

Sanjiv Bhasin of IIFL Securities remains bullish on Zee and has a target of Rs 250 on the stock this month. He said yesteryear’s wealth destroyer can be a great wealth creator in 2021.

For ITC fans

In this thread, ‘Fundoo Professor’ Sanjay Bakshi explains how a demerger will unlock value for ITC shareholders.

Herd Behaviour

Behavioural finance expert and author Morgan Housel says two things can be true about this market: 1) It’s crazy, and 2) social media has permanently changed investor behavior in ways many professional investors haven’t yet come to terms with.

“People are interpreting this as suggesting the market will never crash. I think it’s the opposite: we’ve just made it easier for crazy things to happen,” he said.

Time to panic?

DSP Mutual Fund’s Kalpen Parekh said if you have to panic – don’t panic at March 2020 lows – rather panic at June 2021 highs. “Not a timing advise. The urge to rebalance asset allocation increases after sharp corrections, never when prices rise every day. I exercise my urge to trim by shifting from equity to DAAF.”

Contra bet
PMS fund manager Shyam Sekhar said the best contrarian theme right now is anti-ESG. “Back the truck, pick your shovels, pack the portfolio, load as much as you like and drive on. Your GPS will take you to the bank laughing all the way along.”

Show me the cash

Independent market expert Sandip Sabharwal said dividends and buybacks are the only true reflection of cash in the balance of companies.

Valuation worries
Sabharwal pointed out that the valuation gap between Bajaj Finance and any other NBFC stock is now at a record high. “So only Bajaj Finance will be able to cope up with the NPA spike due to the Covid second wave? Bajaj Finance is now 25-30% more expensive than any other financial stock in India,” he said.