{"id":39007,"date":"2025-11-14T17:19:24","date_gmt":"2025-11-14T11:49:24","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=39007"},"modified":"2025-11-14T17:19:24","modified_gmt":"2025-11-14T11:49:24","slug":"the-winning-move","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/the-winning-move\/","title":{"rendered":"The Winning Move"},"content":{"rendered":"

In the Oscar-nominated sci-fi movie <\/span>WarGames<\/span><\/i>, released in 1983 at the height of the US-Russia cold war, a computer scientist and an artificial intelligence supercomputer play out every possible scenario in the case of a global nuclear war. Eventually, the supercomputer concludes: \u201cIt is a strange game. The only winning move is not to play.\u201d<\/span><\/p>\n

A lot has changed since 1983. The world has avoided a nuclear war\u2014thus far! Computers have transformed how the world operates. And now, we are in the middle of an AI boom that its proponents say will transform the world yet again.\u00a0<\/span><\/p>\n

And even though not everyone knows how exactly AI will change our lives\u2014apart from saying it will take away millions of jobs and create some new ones\u2014everybody from the world\u2019s biggest tech giants in Silicon Valley to the smallest startups emerging from near the potholed roads of Gurugram and the choked bylanes of Bengaluru is investing heavily into AI.<\/span><\/p>\n

Microsoft, Google, Amazon, Oracle, Facebook parent Meta, ChatGPT creator OpenAI and dozens of other companies are pouring billions of dollars into AI technologies, data centres and related work. The frenzy has boosted their share price. Amazon and Google parent Alphabet’s shares have tripled in three years since OpenAI released ChatGPT. Microsoft has doubled and Meta has surged nearly six times. The biggest beneficiary of this boom is chipmaker Nvidia, whose stock has soared 1,300% in five years.\u00a0<\/span><\/p>\n

In turn, these companies have pushed US stock markets to record highs, defying macroeconomic challenges such as inflation and high interest rates as well as Donald Trump\u2019s tariff wars. In fact, AI stocks account for 75% of the S&P 500 index\u2019s returns in the last three years.<\/span><\/p>\n

But this boom is now raising concerns from some quarters of being a bubble that could burst any time. And one of those who feels that way has decided to hang his boots.<\/span><\/p>\n

Michael Burry, who rose to fame after making successful bets against the US subprime housing market in 2008 and whose exploits were recounted in the movie \u201cThe Big Short\u201d, is closing his hedge fund Scion Asset Management.<\/span><\/p>\n

Burry said he would liquidate his funds and return capital to investors of Scion, which managed $155 million as of March.\u00a0<\/span><\/p>\n

\u201cMy estimation of value in securities is not now, and has not been for some time, in sync with the markets,\u201d Burry said in the letter widely quoted in the media, explaining his decision to quit what he believes is a frothy market.<\/span><\/p>\n

Burry has been criticizing AI companies such as Nvidia and Palantir\u2014whose shares have jumped almost 990% in five years\u2014and questioning the cloud infrastructure boom. He has also accused tech companies of using aggressive accounting to inflate profits from their massive hardware investments.<\/span><\/p>\n

So, are we really going through a stock market bubble, particularly in the US? Well, we can\u2019t say whether we are or aren\u2019t. But we will say that each investor must weigh their investments carefully and decide on questions such as when, where and how to invest and whether to even invest at certain times. Sometimes, the bets will strike gold. And sometimes, as Burry posted on social media last month citing the 1983 movie, \u201cthe only winning move is not to play.\u201d<\/span><\/p>\n

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\"SIP_Kuvera\"<\/b><\/strong><\/span><\/p>\n

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Going Quiet<\/b><\/h3>\n

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Michael Burry isn\u2019t the only one moving on to things other than investing. The world\u2019s most famous investor also decided this week that he would be \u201cgoing quiet\u201d and let his successor take charge.<\/span><\/p>\n

In perhaps his last letter to Berkshire Hathaway shareholders, Warren\u00a0Buffett\u00a0said Greg Abel will now take the lead in communicating with them and that they should stick around despite a recent drop in the company\u2019s stock.<\/span><\/p>\n

\u201cI can\u2019t think of a CEO, a management consultant, an academic, a member of government – you name it – that I would select over Greg to handle your savings and mine,\u201d\u00a0Buffett\u00a0wrote. \u201cHe is a great manager, a tireless worker and an honest communicator. Wish him an extended tenure,\u201d he said as he endorsed Abel and promised to remain a major shareholder.<\/span><\/p>\n

In his letter,\u00a0Buffett\u00a0said he planned to speed up his charitable donations to family foundations led by his daughter Susie, 72, and sons Howard, 70, and Peter, 67. He donated more than $1.3 billion of Berkshire stock this week to four family foundations led by his children. Overall, he has donated more than half his Berkshire shares since 2006, mainly to the Gates Foundation, but still owns nearly 14% of the conglomerate and is worth around $148.2 billion.<\/span><\/p>\n

Buffett has led Berkshire since 1965 and transformed what was once a failing textile company to a $1.1 trillion conglomerate with nearly 200 businesses. While he will remain chairman, Abel will take over most responsibilities as CEO and write Berkshire\u2019s annual shareholder letters from now on.<\/span><\/p>\n

\u201cAs the British would say, I\u2019m \u2018going quiet\u2019,\u201d\u00a0Buffett\u00a0wrote. But the 95-year-old won\u2019t stop working altogether. \u201cThough I move slowly and read with increasing difficulty, I am at the office five days a week where I work with wonderful people,\u201d he wrote.<\/span><\/p>\n

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Taking Money Off the Table<\/b><\/h3>\n

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Staying on the topic of investing, mutual fund investors in India\u2014at least some of them\u2014appear to have booked profits in October as stock markets jumped 4.5% during the month to reach closer to record highs.<\/span><\/p>\n

Data released by the Association of Mutual Funds in India (AMFI) this week showed that net equity inflows fell 19% to Rs 24,690 crore during October from Rs 30,422 crore in September. This is the third consecutive month of decline.<\/span><\/p>\n

Money flowing through systematic investment plans (SIPs) remained strong, hitting a new high of Rs 29,529 crore. After adding lumpsum investments, the drop in the net inflow shows investors would have booked profits.<\/span><\/p>\n

The slowdown was visible across most categories. Large-cap funds got only Rs 972 crore versus Rs 2,319 crore in September while tax-saving ELSS funds saw net outflows of Rs 666 crore. Small-cap funds received Rs 3,476 crore versus Rs 4,363 crore in September while inflows in mid-cap funds slipped to Rs 3,807 crore from Rs 5,085 crore.<\/span><\/p>\n

Flexi-cap funds bucked the trend as inflows climbed to Rs 8,929 crore from Rs 7,029 crore. Hybrid funds, too, remained in favour as they garnered Rs 14,156 crore in October versus Rs 9,397 crore the month before.\u00a0<\/span><\/p>\n

Debt funds recorded net inflows of Rs 1.59 trillion in October, compared with an outflow of Rs 1.01 trillion in September when companies typically withdraw month to pay advance tax. The surge was led by liquid funds, which received inflows of Rs 89,375 crore, as companies redeployed short-term surplus funds.<\/span><\/p>\n

Gold ETFs, too, attracted strong investor interest in October, recording net inflows of Rs 7,743 crore, though this was lower than September\u2019s Rs 8,363 crore.<\/span><\/p>\n

As for the Specialised Investment Funds (SIFs), the newly minted schemes recorded inflows of Rs 2,004 crore in October. Quant Mutual Fund collected Rs 391 crore for its equity long-short fund while three hybrid long-short funds\u2014launched by SBI MF, Quant and Edelweiss\u2014together collected Rs 1,510 crore during the period.<\/span><\/p>\n

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Booster Dose<\/b><\/h3>\n

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Moving on to some economic news, the government has approved spending Rs 45,060 crore, or about $5.1 billion, to support exporters hit by US tariffs. The plan allocates Rs 25,060 crore over six years for affordable trade finance for small exporters, logistics and market support under an export promotion package, the government announced this week.\u00a0<\/span><\/p>\n

The package also includes Rs 20,000 crore in credit guarantees on bank loans to exporters. This programme would provide credit guarantees on collateral-free bank loans of up to Rs 50 crore. It will run until March 2026 and aims to help exporters to boost their competitiveness and explore new markets.<\/span><\/p>\n

The package comes about three months after the US President Donald Trump in August imposed 25% duties on Indian goods and then levied an additional 25% penalty for India\u2019s purchases of crude oil from Russia.\u00a0<\/span><\/p>\n

The tariffs are among the highest imposed by the US on any of its trading partners. These duties are especially hurting Indian exporters in labour-intensive sectors such as textiles and garments, gems and jewellery, leather goods, chemicals and seafood, particularly shrimp. In fact, since many of these industries operate on narrow margins, these tariffs have made Indian goods less competitive against rivals from China, Bangladesh and Vietnam. This is causing job losses across industrial hubs in states such as Tamil Nadu and Gujarat.<\/span><\/p>\n

Early data show the tariffs are taking a toll. India\u2019s merchandise exports to the US dropped almost 12% year-on-year to $5.43 billion in September. In such a situation, the government\u2019s package will certainly help exporters.\u00a0<\/span><\/p>\n

Critics, however, say it might be too little, too late. For instance, the low-cost trade finance component of Rs 25,060 crore will be spread over six years. This means less than Rs 4,200 crore a year. The government is perhaps hoping that it would be able to reach a trade deal with the US soon, with Trump himself saying the two countries were close to an agreement.<\/span><\/p>\n

Moreover, the Indian economy has been cruising at a steady pace so far and the impact of US tariffs is likely to be limited. The latest assurance came this week when Moody\u2019s Ratings said that it expects India\u2019s economy to grow by around 6.4% in 2026 and 6.5% in 2027 despite global challenges and high US tariffs on some goods. Moody\u2019s said that growth will remain strong because of heavy investment in infrastructure, rising consumer spending, and diversified exports.<\/span><\/p>\n

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Market Wrap<\/b><\/h3>\n

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India\u2019s stock markets bounced back this week, as the lifting of the US government\u2019s shutdown boosted IT and pharmaceutical stocks and as improved corporate earnings buoyed sentiment.<\/span><\/p>\n

Both the Nifty 50 and the BSE Sensex gained about 1.6% this week. The small-caps and mid-caps rose about 1% and 1.5%, respectively. All 16 major sectors rose for the week. The IT index gained 3.4% for the week while the pharma index companies rose 2.9%. Both sectors get a significant part of their revenue from the US.<\/span><\/p>\n

Asian Paints was the top Nifty gainer. It jumped 11.2% this week after its quarterly profit surged. It was followed by Adani Enterprises, which climbed 6.2%, and IndiGo parent InterGlobe Aviation, which rose 5.8%.\u00a0<\/span><\/p>\n

HCL Tech was the top IT stock, rising 5.4%. TCS, Tech Mahindra, Wipro each gained more than 3%. Among drugmakers, Sun Pharma climbed 3.9% while Dr Reddy\u2019s Labs gained 3.4%. Jio Financial, Bharti Airtel and Adani Ports were the other major winners this week.<\/span><\/p>\n

At the other end of the spectrum, Trent was the top loser. The retailer slipped 5.1% after reporting its slowest revenue growth since 2021. Bajaj Finance lost 4.5% after slashing its asset growth forecast for 2025-26. Tata Steel, Apollo Hospitals, Max Healthcare, Eicher and Bajaj Finserv were the other major laggards.<\/span><\/p>\n

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\"FD_Kuvera\"<\/p>\n

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Earnings snapshot<\/b><\/h3>\n

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