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Why Vivek Bajaj is waiting for a momentum market


Bajaj started as a commodity analyst with JM Financial, but quit soon after to become a full-time trader. He has traded not only in equities but also in commodities and currencies. His company iRageCapital, launched in 2009, was among the initial firms that introduced algo trading in India. At present, Kredent InfoEdge has three business streams — StockEdge, Elearnmarkets and StockEdge Club.

“We have created an ecosystem which can serve as an investor’s complete journey—from learning (through elearnmarkets), research and data analytics (through StockEdge), collaboration (through StockEdge Social), and now transaction as well. Investors can access their demat accounts through our StockEdge platform,” he told Mint. 

Overall, 4 million users have interacted with Kredent InfoEdge across the three businesses, according to Bajaj. And of them, 150,000 users have opted for paid services. The company had reported 22 crore revenue in FY22 compared to 14 crore in FY21.

Bajaj hardly does any trading now. “Between 2006 and 2013, I was extremely active in trading—from morning to midnight. Later, I moved to passive trading. Subconsciously, I keep tracking the markets the full day though I am not an active intraday trader anymore,” says Bajaj.

Passive trading is about holding positions for mid-to-long-term swings and not participating in small movements in the market. “My target is typically to get 10-25% movements in a stock,” he says.

Momentum versus Core

Bajaj has been “super bullish” on equities. His investments comprise a core portfolio linked to value and growth investing and a momentum portfolio, also called satellite portfolio. “I go aggressive on momentum trading when the market is on an uptrend, that is when the Nifty is trading above 200-DMA (Day Moving Average),” says Bajaj. The share in momentum portfolio goes up to 70% at such times, while the rest 30% comprises the core portfolio of quality stocks in which Bajaj has systematic investment plans (SIPs). He books profits from its momentum portfolio and sits on cash when the market is on a downtrend. About 30% of his overall portfolio is cash in the current market scenario.

Bajaj’s equity portfolio also comprises mutual funds (MFs). This could be Nifty index funds or exchange traded funds (ETFs), which he believes are the best products in the MF industry. “About 15-20% of my equity portfolio is into MFs, which is part of my core portfolio,” he says.

Bajaj has diversified his investments across equities (30%), debt (10%), gold (10%), real estate (20%) and cash (30%). Had it been a momentum market, the 30% cash would have been deployed in equities as well. “Momentum will come to picture only when I can spot momentum market trends. So, I am sitting on a lot of cash right now.”

Bajaj’s equity portfolio has remained flat in the last one year with a compounded annual growth rate of 20%.

Like many Indian families, Bajaj holds a good amount of physical gold. He also accumulates some paper gold on a regular basis.

But these aren’t gold ETFs, gold mutual funds or even sovereign gold bonds. “We are a member of Multi Commodity Exchange (MCX). So, I take MCX contracts to take position in gold. This helps me earn better return on capital because I don’t have to pay upfront. The upfront capital deployment is less thanks to just 15% margin requirement.”

This, however, is a sophisticated strategy that most retail investors should not attempt to implement. Bajaj has been doing this for the last 4-5 years on a weekly basis. The current prices are 20-25% higher than his average buying cost. However, his gold investment has generated a CAGR of 4-5%. “For me, gold is more of a hedge than investment.”

As for debt, he only prefers liquid funds. “For me, debt funds are only to park money for the short-term. I need cash to deploy in the market. I don’t take interest rate risks by investing in debt funds.”

Whatever real estate he has is for his own use. “My residence and office is my real estate. I don’t see it as an investment option.”

Does Bajaj do goal-based planning? “I do have mental mapping of financial goals lined up, but I have reached a state where I don’t have to do it on an excel sheet or any other document,” he says.

Bajaj has a huge following on social media platforms YouTube, LinkedIn and Twitter. He started face-to-face interviews with market mavens in 2016 for elearnmarkets. He started a second channel in November 2020. Both these are quite popular and have 800,000 and 600,000 subscribers, respectively. Yet, the one thing that is not going well for Bajaj is the subscription business. “The revenues from subscriptions have not been enough. I see it happening only if the subscription economy picks pace in India,” he says.

He holds a research analyst licence under StockEdge but plans to apply for an RIA (registered investment advisor) licence so that he can offer portfolio-level advice to investors.

Bajaj has a message for traders who look up to him for advice: “Don’t be in a hurry. Trading is one occupation which can be done till your last breath. The most important thing is to sustain in the market.”

Though he stays away from the financial capital, Bajaj says he is not interested in moving to Mumbai. He’s happy interacting with Dalal Street from the comfort of his home—the City of Joy, Kolkata.

 

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