Rakesh Pujara, who started Compounding Wealth Advisors LLP, believes that investing based on clear rules and algorithms is getting more popular as more people start using these smart strategies. In a recent chat at an event in Surat, he shared how more everyday investors are now using smart beta and quantitative investing.
How is Options Trading Changing in India?
Pujara explained that options trading in India is growing fast, with more people joining the market. The event set a record for the number of participants. However, this fast growth worries regulators, who are concerned about how much leverage (borrowed money) traders are using, which could lead to big losses. To protect retail investors, new regulations have been introduced. Over time, as the market stabilizes, these limits may be relaxed.
Smallcases: Two Years of Success
Pujara’s firm launched six Smallcases two years ago, and they have been doing really well. Even though the market faced ups and downs in 2024-25, the strategies adapted by increasing cash in portfolios when needed.
Investment Philosophy
The approach behind these Smallcases is based on price movements and technical analysis. Pujara believes that price shows everything, so they focus on data like price trends and momentum rather than personal opinions.
Investment Size and Horizon
They suggest that investors put in between Rs. 5 lakh and Rs. 15 lakh in each Smallcase. The best time to stay invested is 3 to 5 years to really benefit from compounding.
Market Thoughts
Pujara thinks the market is becoming more stable now. Large-cap stocks, especially in banking and financial services, are looking good, whereas smaller stocks may need more time to catch up.
The Future of Systematic Investing
He believes that systematic investing based on solid rules will keep growing, as more people adopt these strategies. These methods provide clear, risk-adjusted returns and help take emotions out of investing. As regulations change, this type of investing will become more common.
Momentum Investing Risks
However, momentum investing can be risky during market downturns, as quick changes in trends can cause big losses. To handle this, they use methods like stop losses and careful position sizing.
Evolution of Algorithmic Trading
Pujara noted that algorithmic trading has advanced a lot over the last decade. Improvements in technology have made it faster and easier to use, with more traders now accessing automated trading tools. New strategies and better risk management techniques are making trading smarter.
New Product Launch
Recently, his team launched a new Smallcase called CWA Smart Select, featuring a carefully chosen selection of stocks, each allocated around 4%. This portfolio is based on their unique research methods.
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