Riding the Economic Waves: 2 Years and Counting

As we're approaching the end of 2023, I'm thrilled to have successfully completed two years in the stock market. The past year, in a nutshell, was a good one for me – although, in the stock market, 'good' can be a relative term. For me, achieving a 2% alpha over the Nifty50 was a significant milestone. It might not sound like much, but it was a marked improvement over my first year, which was, to put it mildly, "A Loss".

This second year of my stock market journey has been a whirlwind of learning and growth. I've delved into various aspects of the stock market, from refining my technical analysis skills to diving into fundamental analysis, conducting in-depth research, creating presentations, and managing my portfolio with a more risk-averse mindset.

My second-year journey kicked off just as the market was about to hit the all-time high (ATH) of 2021. However, I couldn't help but be skeptical when we witnessed three consecutive strong candles breaking that ATH. The global backdrop was one of rising interest rates to combat inflation, which had me concerned. One major divergence I observed between the US and Indian markets was consumer sentiment. In the US, a sudden shift in consumer confidence led to economic uncertainty and even a technical recession, despite reluctance to acknowledge it.

In India, the story played out differently. Large-cap stocks saw a significant uptrend, but the market corrections were natural. Despite a promising budget, the Adani Group's troubles introduced confusion into the Indian markets. Yet, interestingly, the Indian market exhibited strength that contradicted prevailing public sentiment. Even as we corrected after breaching the 17,000 mark on Nifty 50, I remained invested. In fact, I gradually increased my positions starting from the first week of April when the first significant breakout occurred.

Until June, my portfolio heavily featured defensive and undervalued stocks like HUL. But from June, I shifted my focus towards small and mid-cap stocks. I employed a mixed investment strategy, balancing equities and mutual funds to diversify risks across various indices.

In June, I turned more bullish on the US markets due to the prevailing skepticism and panic. Over a span of 3-4 weeks, I reallocated 5-6% of my portfolio into Nasdaq and the US total stock market through mutual funds. This segment of my portfolio significantly outperformed the rest, delivering a staggering 37% returns by October 2023, still unrealized.

I experimented considerably with my portfolio allocations this year, sometimes being defensive, other times, aggressive, and sometimes both. It's been an enjoyable journey, but there's one thing I can't quite figure out – why HDFC Bank and Kotak Bank have yet to perform, despite patiently waiting for a year.

Looking ahead to the coming year, I anticipate Nifty breaking its all-time high once more, but I don't foresee an extended rally in Indian markets. The effect of interest rates in the USA and the ongoing global economic situation could have a ripple effect on the Indian economy as we start focusing back on Fiscal Deficit post elections. We may see more cautious consumer spending compared to the previous year. While I could be mistaken, I expect a nominal 7-8% return over NIFTY in the coming year, with Nasdaq potentially outperforming Indian markets due to interest rate cuts.

Sectors that I believe may rise from here include hospitals, private banks, automobiles, renewable energy, real-estate and chemical industries (which appears to be bottoming out).

Disc - Not an Investment Advice, Only for Educational Purposes.

Top 5 Strategies this year -

Sr No	Investment Strategy	Returns
​1	Defense Strategy - Hindustan Aeronautics Limited	110%
2	Small Cap Investment Strategy	41%
3	US Portfolio Strategy ( Mutual Fund Route )	37%
4	Hospital Sectoral Strategy ( HCG, NH, Rainbow )	37%
5	HDFC Group Strategy ( HDFC , HDFC Bank, HDFC Life, HDFC AMC )	14%

(If you're wondering such great returns were made from these strategies, but only 2% alpha over Nifty50, that's because portfolio sizing/allocation was not proper, something to focus for Year 3)