Alok C. Churiwala, MD, Churiwala Securities Pvt. Ltd, is a third generation stockbroker and an Angel Investor. His contribution to the capital markets saw him appointed as a member of the BSE Governing Board in the past and as the Vice-Chairman of the BSE Brokers Forum. He is much sought after by the Indian business media for his views and his equity forecasts. Speaking to Mayura Shanbaug, Churiwala believes that the India story on the Demographic Dividend front is still on and shall remain so, for the next couple of decades. As regards the Sensex in 2020, he says “I will guess and put my foot in the mouth and say it here; it will be in excess of 50,000.”
A little background …
My company Churiwala Securities Pvt. Ltd. (CSPL) is among the leading and respected retail broking firms in India with over 3 decades of experience in creating wealth for investors. The company founded by Late Shri Gaurishankar B. Churiwala in 1971, is a member of the Bombay Stock Exchange and a Depository Participant with the Central Depository Services (India) Ltd. Its group entity also offers services on The National Stock Exchange and MCX–SX. Our expertise lies in personalized investment planning in Equities/ Portfolio Advisory for HNI and Retail clients. Our core focus is to look for value and assist our clients in taking prudent investment decisions.
At what point did you think of making a career in the financial markets?
Stock Broking was our family business. Alongside my graduation from H.R. College, I was also learning the ropes of the stock broking business in my spare time. By the time I was through with graduation I was ready to face the challenges thrown by the world of Bulls and Bears in Dalal Street. It was a foregone conclusion that I would move in to assist my dad in the family business.
How do you pick your investments; Technical analysis, or fundamentals?
I essentially am neither a hard core fundamentalist nor a slave to charts. But tend to use a combination of both fundamentals and technicals, when signals from either are not compelling. I also like to keep myself abreast of the grapevine on the street.
My methodology is very simple and stems from my investment philosophy; I look for value buys and believe in long term investments. I am also of the view that we have to have conviction in the businesses (companies) that we invest in, if we lack that conviction, we fall prey to selling a good stock when it is in a downward cycle. Most of the veterans of this trade have made more money by sticking by their stocks than by reacting to every news piece of which there is an overflow these days.
What appeals to you about investing?
I am an investor. I look at value investments. I am not comfortable trading either intraday or on the Futures and Options segment. Not to say that I don't trade at all, but I am extremely selective and do so only in small quantities. My trading bias is on the long side and that is probably the reason that I am not the most efficient trader. I am aware that as a trader we should not have biases, either long or short, but trade the trend.
What differentiates you from others?
I think, the principal difference that differentiates me from most traders/investors is that I know what my weaknesses are. Also, as an investor I am extremely confident about the stocks we pick and experience has shown that most of them tend to do well if the basic tenets of Value Investing are followed.
What gives you that edge?
The thrill is to extract value from investments. But, to get there one requires knowledge, not only of the markets but about the self. There are two ways of acquiring this knowledge - Watching the behavior of others and observing our own behavior in situations.
Any applicable lessons to investing?
Certainly; every trader and investor must remember that with the promise of gain, attached is the possibility of a loss. One should do a judicious risk-reward analysis before initiating a transaction.
How much of what you do is based on gut feelings?
A gut feeling is a signal that the mind gives based on the individuals past experiences, eco system etc. It triggers automatically and without cognition. I do pay heed to it and it has served me well.
Do you try to anticipate or follow market trends?
As is often said, ‘Trend is the Best Friend’... it is always safe to follow market trends, but anticipating the trend is what can differentiate between normal profit, super normal profit or a loss. The markets always tend to discount the future; hence at some level it becomes imperative to anticipate the movements in the future. Some of the factors that need to be taken into account are obviously economic, political and last but not the least, social.
How do you decide when you're wrong?
This is where our conviction in the business invested in comes into play. There are occasions when the stock moves in the opposite direction, the classic dilemma is should we take a loss, buy more of the same (popularly known as averaging) or do nothing.
Each decision would depend on several factors. Has there been a material change in the dynamics of the Industry? Is there aspersion cast on the quality of people managing the business? Is the company found wanting on Corporate Governance standards? Some of these factors are non negotiable, and if the answers to these are not palatable then the decision, albeit a tough one, is to exit the stock. But if it’s just a function Dynamics of Global Markets, Political Uncertainty or Normal Business Cycles then the call would be to either buy more or at best do nothing.
What makes an investor successful?
I would say knowing yourself or where your strength lies and acting likewise, meaning, if you know that you have the ability to trade successfully then one should continue with it. Also having realistic expectation of returns from the markets help because with higher returns are attached higher risks. I know that I am not a good trader, hence desist from it.
Any positions you ever lost sleep over?
As I mentioned earlier, I am not much of a trader and very rarely indulge in speculative activity. Even when investments go wrong, the conviction carries us through, but have never been occasions to lose sleep.
What would make you wary about the markets?
The current scenario is distressing. Most youngsters are falling prey to the lure of Intraday Trading, Margin Trading, Speculating on the futures contracts and not leveraging on the use of intelligent strategies whilst playing options. The falling level of Corporate Governance Standards amongst the second and third tier Companies is also a concern.
What is your take on the current market scenario, Indian as well as global?
The Indian market space offers multiple avenues Equities, Currencies, Commodities, Mutual Funds. The environment is well regulated. The technology used is efficient and cost effective. All these augur well for the investors. The economy is still showing a growth of 6% despite the drought like situation, which, is much better than the American and European economies. The India story on Demographic Dividend is still on and shall remain so for the next couple of decades. The challenges before us, too, are manifold…but can be overcome.
Where do you see the Indian markets over the long term?
Markets tend to provide opportunities at every juncture. Bull or Bear markets need not bother the investors or traders. The challenge is to spot the trend and play it accordingly. Also our preoccupation with trying to guess what the markets will do is meaningless. We should be more concerned with what we will do in the markets in a given situation.
Now to crystal ball gaze... First let me share some facts and that should give the readers some perspective: The Sensex in 1990 was 1000, a decade later in 2000 it touched 6000, and in 2010 it kissed 20000. So it’s anybody's guess what it ought to be in 2020. But I will put my foot in the mouth and say it here, that it will be in excess of 50,000.