In a recent tongue-in-cheek report, analysts at Kotak Institutional Equities (KIE) categorised Indian stock market investors into four broad categories: frogs, pigs, vultures and apes.
Each category of investor has their own interpretation of the Indian equity market, which is reflected in their investment strategy, Sanjeev Prasad, co-head of Kotak Institutional Equities (KIE), said in a recent report co-authored with Anindoya Bhowmik and Sunita Bhardwa.
Click here to connect with us on WhatsApp
“The jungle is not a place of egos. The animals in the jungle know that there is only one King of the jungle – the jungle itself,” Prasad writes.
According to KIE, there are four main types of investors in the jungle of the Indian stock market.
Frog
However, the frogs are unaware of this as their bodies have adapted to the rising temperatures and they are convinced that the pond will cool automatically, KIE said.
“Some jungle watchers are attributing the frog’s erratic behavior (the frog won’t jump out of the boiling water) to the Pig Month Scheme (which KIE believes is an inflow of funds via Systematic Investment Plans, or SIPs) (some technical jungle folks loosely refer to it as ‘liquidity’) – a scheme to dump a cold, hard substance into the pond water,” the KIE note said.
pig
KIE’s notes also state that the pigs are having a great time, happy with the fact that the pond’s water level is rising (full of bubbles in the water) but remain ignorant to the fact that the water temperature (market valuation) has reached extremely high levels.
“Indeed, there is a danger that the water in the pond will turn to steam and disappear completely. However, the pigs, largely ignorant of the rules of the jungle (stock market), are too busy making money to pay attention to such potential disastrous events. They are very confident in their ability to siphon the water from the pond at the right time, before other animals or their fellow pigs do the same,” the KIE note said.
Vulture
However, vultures are investors who have not had a very good time in the stock market and are equated with foreign investors who have returned to this particular jungle (Indian stock market) with high hopes of making big gains in a short space of time but have so far been disappointed.
“The pigs are frolicking and have put on a lot of weight but have no signs of dying (they are in good spirits). The vultures, which KIE suggests may be foreign investors, had migrated to other jungles (other stock markets around the world) some years ago, especially across a tall and long mountain range (China). However, there is very little prey in that jungle and some of the vultures have no choice but to return to this jungle,” the memo said.
Apes
The KIE memo states that any description of the jungle would be incomplete without a discussion of the role of the apes, who, as always, sit stilted in the trees, rarely descending to the jungle floor and periodically dropping overripe fruit on the other animals of the jungle. The apes seem to fit the role of unregulated stock advisors.
“Other animals have learned to ignore these droppings, prompting the apes to struggle for a sense of purpose. Their chatter and chatter has recently reached unprecedented levels and they have begun speaking an unrecognizable language (sounds like English, but with only superlatives and no facts, figures or figures). This appears to be a new form of ape-life,” the KIE note said.
