Mind Your Money and Markets

As attractive as it may look it is very easy to make mistakes while investing, and the mistakes can have a significant impact on your capital. Learn to strike a balance of mind-set, says Sahaj Agrawal, Head of Research and Derivatives, Kotak Securities. He adds that one should have the right combination of greed, fear, money, and mind. This industry has indeed made him take wise decisions, he believes. In a conversation with Corporate Citizen, Sahaj Agrawal, shares his journey in the stock market industry, talks about the premise of Derivate Analyst, how the inflation and interest rate in America affect India, and more.

"Essentially, a derivative analyst gathers market data and then carefully analysis it. This research provides valuable insights for traders and managers to make informed decisions. A derivative analyst provides trade support that includes derivative modelling and multi-vertical reconciliation"

- Sahaj Agrawal

Corporate Citizen: Tell us about your growing up days.

Sahaj Agrawal: I was born and brought up in Ahmedabad. For a short while, I was in South India – Vellore, Tamil Nadu. To give you a background of my family, my father is a Cardiac Surgeon and my mother was into hospital administration and is now a homemaker. My wife is into early education for children. My son is 6 and enjoying his childhood. My journey at Nirma Institute of Management, Ahmedabad transformed me a lot and made me ready for a career in the BFSI sector. Multi-cultural exposure along with the hostel life taught me a lot. From being a pampered child, this experience has turned me into a grounded person. I was always interested in business and even today in my current position I am driven by passion. Something that my father taught me has worked well – hard work and honesty. It has helped me climb the ladder of success. Along with this, I have an undying passion to make it big here.

CC: How has the education that you’ve garnered shaped you into a better person to take on the challenges of the corporate world?

I completed my B.Com from HL College of commerce and later went on to pursue my MBA in finance from the Institute of Management, Nirma University, Ahmedabad. Education gave me confidence and prepared me to enter this industry. A lot of times it is how you deal with a situation that helps us in tiding over problems rather than the solution itself. I owe a lot to my institute and parental guidance. Also, I think for me it has been a self-learning exercise. Being the stock market – hits and misses are a part of life.

CC: What made you choose to do what you do?

Back in 2002, my friend introduced me to the world of IPOs. After that investments and trading journey started and there was no looking back. There are a mix of reasons why I was attracted to this field. I was welcomed with several good opportunities. Plus, I was fortunate enough to work with some amazing organizations where I worked, learnt a lot, and grew leaps and bounds. I was happy when my interest started growing beyond boundaries. Derivatives involve a lot of math which is fascinating. This means you are always exploring new opportunities. Curiosity, the scope of possibilities and the attitude to fight against uncertainty is what made me fall in love with this field all over again. The market has taught me quite a few things – one has to constantly be learning and exploring relationship management and patience

CC: Give us a gist of your tryst with the stock market.

I started my career in 2006. Soon I got my first job as a Derivatives Analyst with Karvy Financial Services, Hyderabad. Stayed there for a year and added a great experience to my kitty. It is a given fact that all the stock market action happens in Mumbai. My aspirations brought me to Mumbai. Bagging a job with Kotak Security was a dream come true. Since then, I’m with them. Gradually climbed the ladder of success. Alternate research and trading systems development has been my core interest areas. Behavioural analysis of markets, building trading systems based on macro-economic parameters and Low-frequency positional trading systems have been some of my success areas. Training and Development have been a recent addition to my profile.

In 2007, I joined Kotak Securities as their Derivatives Analyst. There I handled Derivative and technical analysis, trading ideas and strategies, and client interaction - internal and external. In 2016, I became the Head of Research, Derivatives.

CC: Walk us through the role of a derivative analyst. What prime qualities they should hon?

Essentially, a derivative analyst gathers market data and then carefully analysis it. This research provides valuable insights for traders and managers to make informed decisions. A derivative analyst provides trade support that includes derivative modelling and multi-vertical reconciliation. Derivatives and volatility walk hand in hand. So, as a person, one should be comfortable in chaos and be in a position to think straight. I think derivatives are all about money and the mind. Keeping one’s mind balanced helps a lot. Obviously, understanding derivatives and strong quants can equip you better to deal with numbers.

CC: You have been with Kotak for over 15 years now. What made you stick to one organisation for this long?

I come from a family of businesspeople. Over the years, I have developed the mind-set of doing what I love by taking measured risks. Moreover, Kotak is one of the best and most progressive organisations to work with. The work environment there is pretty amiable, and my colleagues and seniors have been great subordinates. I grew steadily in this organisation, and it never seizes to provide me with more opportunities to grow. I easily connect with their value system and mission. Hence, I stuck with this organisation.

CC: How can one mitigate market risk?

In my experience risk management is one of the main pillars of trading – not just derivatives. In derivatives, it is all the more important to keep your leveraged risk under control. I usually close on all controllable parameters before isolating a trading idea – I mention this to a lot of lients – do your firefighting before entering the trade rather than doing it later.

CC: Given the inflation and interest rate in America, how do you think it will affect India and the global market?

I think every economy reacts differently to inflation and interest rates depending on how the local economic conditions. I believe we are well placed to face the current turbulences. Having said this, I believe allocation should be done at value points only – buying in froth is not advisable.

CC: Economic slowdown, recession, inflation, pandemic, and other uncertainties are leaving the people worried. So, can a common person put their fears to rest and recession-proof their investment?

Actually, the above-mentioned factors have historically been known as wealth-generating opportunities for the markets – be patient for value to emerge when the situation is clouded by negativity. A good price always comes with bad news. For recession-proofing, yourself – depending on your appetite always have a portfolio allocation strategy. That will always keep you in the game.

CC: How was the market pre-covid and how has it recovered post?

The performance of the market speaks for itself. Covid created an opportunity and liquidity triggered an extraordinary rally for global markets. It is fair enough to say that COVID has become a part of our lives. It has surely kicked in productivity. And raised some important questions such as the concept of working from home. Right now, we are going with the hybrid working model. But if required we will exercise other options as well. The Covid impact on the stock market was short-lived as the market was always trading.

This market is known for its challenges, ups and downs and adversity. And it has taught us how to overcome uncertainties. And it has trained us to expect the unexpected. In derivatives, you must ensure risk management is very clear in your mind. We have seen this execution in during the 2008 depression and now. Covid was tough on all, but we learnt to sail through the toughest times.

"The stock market is not just about money. It is a myth that people who have money can only invest or make money. The stock market works 50 per cent on the capital you have and the rest of it is on you, your mind-set, and the balance that you maintain while trading. As attractive as it may look it is very easy to make mistakes"

CC: What are the current market trends?

I believe we are one of the best-performing markets and structurally positively placed. Global concerns remain which could result in some downticks. Though I am into trading and quant; I strongly believe earnings are the key driver for any market.

CC: What’s the best corporate advice you’ve received?

The advice is to build relationships with customers and maintain them. Directly or indirectly, we are in the service industry. To maintain and built a relationship, we must keep talking to the client. Having strong communication with the customer builds trust. If your intent is genuine, your customers will support you through thick and thin. This great piece of advice has helped me in my difficult times.

CC: Golden rules that the market runs on?

It’s basically - Greed and fear. Money and mind. Please understand the stock market is not just about money. It is a myth that people who have money can only invest or make money. The stock market works 50 per cent on the capital you have and the rest of it is on you, your mind-set, and the balance that you maintain while trading. As attractive as it may look it is very easy to make mistakes. And the mistakes can have a significant impact on your capital. Learn to strike a balance of mind-set.

CC: Rakesh Jhunjhunwala was a stock trader with a Midas touch who passed away recently. Your thoughts on the legacy that he has created?

I was lucky enough to grow up watching his interviews and his journey has inspired millions, me being one of them. Since 2000 he was consistent with his approach. A classic example of a long-term value investor. Investors should learn from his experience. He provides a great story on how to grow your capital. The biggest lesson he offered was ‘let go of your mistakes and keep riding on your wins’. He is a legend in a true sense, and he will always be remembered.

CC: Any tips for the newbies who wish to invest?

There is a pyramid of investing in the stock market. The first slab is a stepping stone in equity investment, the second is for equity trading and the last one is the derivatives trading. Don’t compare your journey with anyone as everyone’s journey will be different. It will teach you to have the right mind-set for doing derivatives and managing your risk well. Go through this process to grow.

CC: When not working how do you like to spend your time? Passion and hobbies?

At leisure, I like to spend a lot of time with my son. Supporting his hobbies and passion gives me a lot of peace. Apart from this, I like to socialise with a limited set of people who have been with me through thick and thin. For me, work plays a very important part in my life. So, for me, it mostly works and the remaining part is with family and friends.

CC: What’s your philosophy in life?

Be kind and humble. Thank God for the wonderful life and opportunity you are gifted with.