2021: The Year Of Multibaggers!

Ever since the markets started recovering from the lows of March 2020, the stocks prices have not looked back and what we are witnessing now is a historic rally, which may rarely repeat itself in our lifetime. While the stunning rally has created wealth for investors across the board, what has surprised most participants is the number of multi-baggers this market has created. If you look at the past one-year returns for any random listed stock, chances are that more than 50-50 of the returns being more than 100 percent. Yogesh Supekar discusses at length what makes a multi-bagger and how best we can identify such stocks

- Yogesh Supekar

One could say that it’s raining multi-baggers with frontline indices making lifetime highs for themselves along with mid-cap and small-cap indices. In fact, small-cap and mid-cap indices hitting all-time highs make for an interesting development even though the concern about valuation remains. It is interesting because a majority of investors invest in small caps.

And a majority of the multi-baggers come from small-caps. With small-caps doing exceedingly well after three years of consistent underperformance and ample liquidity in the system aided by participation on all fronts such as FIIs, DIIs and retail investors, the Indian equity market has found itself in a sweet spot.

The benefits of this are being accrued by even those who do not understand the market that well but have shown courage to participate in the uptrend. People who have spent time in the markets know that this phenomenon is temporary and that it may not last forever. However, the newbies in the market, after tasting a wealth-creating opportunity in 2020, do not want to believe that the ongoing rally is a fluke. The fresh breed of investors does not think like old-timers who have spent long periods in the market. Today first-time investors are experiencing multi-bagger returns in almost anything that they have invested in few months ago and that has created unrealistic expectations from the market.