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Ask yourself a question. When the market drops , what's your first reaction ? Nervousness or excitement? If you're nervous, it can change your thinking . And if there is excitement then you are already on the same path where Rakesh Jhunjhunwala used to walk. Today Sensex has fallen by 1%. Banks fell, auto sector fell, news channels are shouting.
Banks crash, auto sector devastated. Investors lost millions. Messages are coming in WhatsApp groups. Sell, get out. And you are sitting there wondering what to do? Wait, do one thing. Close your eyes and imagine a man sitting in an office. All the red on the screen is selling it all . Everyone is scared and that man is smiling.
He was Jhunjhunwala and today we will understand what he thought and what he did. First of all let's clear one thing. A 1% drop is not a crash. This is the normal breathing of the market. But the media portrays it as if the world has ended and middle-class investors sell in panic. While the wealth builder opens his watch list .
That's the difference. Jhunjhunwala used to say that only those make money in the market who take advantage of the fear of others. Now let's understand why banks fall. Whenever there is a hint of RBI policy , a signal of interest rates , banks react because their business depends on interest rates. If rates go up, the NIM will go up, if rates go down, loan growth will go up .
But in uncertainty the market punishes the banks. The same is happening today. But what would Jhunjhunwala ask? Is banking penetration low in India ? Will more people open bank accounts in the next 10 years ? Will digital banking increase? The answer is yes. So today's fall is an opportunity. Talking about the auto sector, people are saying that EV is coming.
Petrol cars will be gone. But Jhunjhunwala asks how many people in India have cars? Just 22 per thousand. 800 per thousand in America. I mean, India's auto market has just started . EV will come but the sector will not die, it will transform. And the companies that are transforming like Tata Motors are the future.
Now an important concept is margin of safety. When a stock is priced lower than its real value , that's a buying opportunity. Banks fell 1% today. Did their value decrease by 1% ? No. SBI's loan book remains the same. HDFC 's customer base remains the same. Kotak's management is the same. Price fell, not value.
This was Jhunjhunwala's core belief. Price and value are different things [in music]. The middle class looks at the price. The wealth builder sees value. 2020 March Covid crash Sussex drops from 38,000 to 25,000. Everyone was selling. The news was screaming. The economy is over. Bought by Jhunjhunwala.
Tata Motors, Star Health, Metro Brands and those investments got multiple in 2 years. Now the practical thing is if he were here today he would check the watch list, verify the fundamentals and accumulate slowly because no one can know the bottom . But the value can be seen. The middle class waits and will buy when the market becomes stable.
But by then the price has gone up. Opportunity was there when everyone was scared. Jhunjhunwala used to say that wealth is not created in the comfort zone. It is created in discomfort. Banks and auto are the core of India's growth . Zoom out. Look at the chart of 10 years, not just one year. You will get the answer.
Jhunjhunwala did not give tips. Used to make systems. Look at Strong Business. Look at honest management. Buy at a reasonable price. Hold it long term. Don't sell in panic. This system took him from ₹5000 to ₹45,000 crore. Now a numbers game Oct 2024 FIIs pulled out ₹94,000 crore and at the same time Indian investors shifted ₹25,000 crore.
On one hand, big global investors are leaving . On the other hand, the common Indian is investing. So who is right? FIIs do global allocation. If better returns are available in the US, then the money is shifted. This does not mean that India is bad. Jhunjhunwala used to say that the exit of FIIs is not India's failure but a global relocation.
But the media spreads panic. Domestic investors do SIPs. They don't do market timing. He believes in the story of India. GDP growth 67% Young population 65% Middle class is growing . Consumption is increasing. These fundamentals do not change. FIIs also came out during the 2008 crisis. Sensex went from 21,000 to 8,000.
Those who left out of fear missed the growth. Those who stayed [in music] made money. Jhunjhunwala used to say, keep short term noise separate from long term strategy. SIP offers rupee cost averaging. The market falls and more units are available. The market grows and fewer units are available. The average cost keeps decreasing.
Without timing, SIP in India increased from Rs 8,000 crore to Rs 25,000 crore. Retail is maturing. Now the market is no longer FII dependent. Domestic money is supporting. The middle class says they will invest [in music] only when FIIs come. The wealth builder says that since there are no FIIs, I am getting a better price.
Jhunjhunwala used to say that India's story is of 2030 years. There is no FII outflow of two-three years in this. If you are not doing SIP then start it. Trust India from ₹500 . Now understand the crash mindset. 2020 Lockdown Day dropped 4000 points. People panicked on the phone and said, "Buy it because they trained their brain." Our brain tells us to run away in danger.
But this is what is wrong with the market. The market drops you sell. Recovers you miss. Jhunjhunwala broke this pattern. Avoid panicking, check fundamentals, look at valuations and do staggered buying. He also accumulated in the 1992 Harshad Mehta scam. Every crash was an opportunity for him. The middle class looks at the price.
The wealth builder sees value. The myth is to get out in a crash. Come to the stable . But by then the market has recovered. You buy high and sell low. Wrong. If the value of a store drops by 20% , will you close it? No. Because the business is strong. Think like an owner even in stocks. Jhunjhunwala used to say that every crash made me rich.
Now Titan's Story 2002 invested ₹5 crore. People made fun of him but he saw the growth of India's middle class . All four pillars including Tanishq Organised Jewellery Titan Quality Management Tata Trust Valuation Strong. He invested and held. I did not sell even during the fall because the conviction was based on research.
Middle class would have sold in a 20% drop. But Jhunjhunwala kept holding and it became Rs 11,000 crore. Conviction does n't come blindly, it comes from research. Do your own research, decide your own, hold your own . Now the most powerful line when the market is scared, be greedy. This idea was of Warren Buffett.
But Jhunjhunwala implemented it in India. Today the market is scared. FIIs are leaving. There are tensions. Valuations are high. But the fundamentals [of music] are strong. GDP growth strong, GST record, infrastructure high, capex started, Jhunjhun wala should do selective buying, not panic. Maintain patience with a margin of safety.
Perfect timing is not necessary, perfect selection is necessary. The middle class finds the bottom. The wealth builder sees value. The bottom is where there is the most fear and no one can buy. By the time we realise it later after looking at the charts, the opportunity is lost. Ask yourself is India's growth over?
Will 140 crore people stop spending? If not, the fall is a sale, and smart people buy on sale. Jhunjhunwala used to say that there is no time to create wealth. It takes conviction and patience. Now the choice is yours. To be afraid or to build. Should you regret selling or celebrate by investing ? Because the one who gets scared when the market falls regrets. And he who executes the plan gets the reward.
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