IPO rush, AI noise and timeless principles: Bhasin on markets

In a market buzzing with IPO frenzy, the promises and pitfalls of AI, and the constant pressure of investor sentiment, one thing remains unchanged—the fundamentals of investing.

Nitin Bhasin, Head of Institutional Equities at Ambit Capital, believes that while technology and trends may reshape the landscape, the golden thumb rules of valuation discipline, behavioural balance, and long-term thinking continue to stand the test of time.

In this conversation with ETMarkets for The Golden Thumb Rule, he shares why every investment is both value-driven and behavioural, how retail investors can apply the Mosaic Theory in practice, and why staying grounded in timeless principles is the key to navigating today’s fast-evolving markets. Edited Excerpts –

Kshitij Anand: Absolutely. And in fact, AI, as you rightly pointed out, will indeed create opportunities and flexibility for investors. But at the same time, it will also create some noise, and that is when the framework for individual investors and institutions will be very important—and very different as well. Probably, the outcome or the result will still be about creating alpha, but the frameworks will vary. One point I would also want to add is: how will behavioural skills change, and what kind of adjustments will investors need to bring into their system once they have devised their frameworks? Because I am sure, at the back of the mind, behavioural instincts will quickly kick in whenever decisions go south, or when things do not go according to plan. So how should investors deal with that?


Nitin Bhasin: Over the last two-and-a-half to three decades of being in the equities market, I have considered myself more of a research analyst than an investor.

But I would say this: every form of investing is value investing, because in the end you are always looking to buy something undervalued. There is no separate category called “value investing” versus “growth investing.” Everything is value investing.

I would also say every investing is behavioural investing. There isn’t really something distinct called behavioural investing versus fundamental investing—because in the end, all investing requires handling your own emotions and, if you are managing other people’s money, handling their emotions as well.

So many times, when things are rising or when they are falling, how you handle yourself makes all the difference. As Warren Buffett said, when the tide goes out, we see who has been swimming naked. When things are falling around you, how you react—whether with greed or with panic—matters a lot. Those golden rules always stand the test of time.

It is just that earlier, a term like “fear of missing out” (FOMO) wasn’t as visible. Today, in this hyper-connected, hyper-aware world, FOMO is a big thing. How do you manage the fear of missing out? Because “social media” is not just phones—it can be the parking garages, the clubs, or even the elevators of high-rises in India, which all become mini social media ecosystems. You see the success of people around you and compare yourself. But for every success story you hear, there are millions of untold failures. We saw this recently when one smart and shrewd F&O derivatives firm was alleged to have made a lot of money at the expense of smaller individuals, who got sucked in after seeing one or two examples of success in their neighbourhood or on social media.

So the golden rule, as always, is: how do you manage your emotions in investing? How do you question the first-level analysis that comes immediately after news breaks?


As an analyst, a professional, or an investor, how do you hold on to your philosophy while still being open to the possibility that you might be wrong? Charlie Munger once said: if you are not destroying one of your most strongly held views every year, then you are not making progress.

So behavioural skills come down to questioning yourself, not reacting too fast, working on your emotions, and being clear and concise in your communication. We often read that great investors are also great communicators.

The reverse need not be true, but communication is critical—because if you are managing other people’s money, you need to choose the right kind of people to partner with, and you need to communicate to them how and why you are designing their portfolios.

As for AI, managers—even those who are 50 or 60 years old—should not only stick to their old styles of reading and patient thinking, which remain very important, but should also consider upgrading themselves with technology tools.

That is where many of their clients and the companies they track will be heading. They can use these tools to create filters, but still apply their own thinking and experience.

The key is marrying experience with the new world—putting your years of knowledge in the context of new tools.

Kshitij Anand: And also, let us talk about the Mosaic Theory. It is often used in institutional investing, but how can retail investors apply it to better interpret market signals and spot inflection points before they become obvious?


Nitin Bhasin: Mosaic Theory is something we first read about in the CFA curriculum almost 20 years ago. Historically, investing often thrived on getting tips or information earlier than others.

Thirty years ago, this wasn’t considered illegal. But today, in a highly regulated world—and rightly so—that is illegal. Mosaic Theory, however, sits in between.

In our research process, it means not just meeting managements or listening to peers, but also going on the ground and connecting the dots. With experience, analysts and investors are able to do this more effectively. Retail investors can do the same in their own way.

For example, in the 1980s, the legendary Fidelity Magellan fund manager Peter Lynch said he would often go to malls to see what new products were appearing. Today, if you go to a DMart, you can observe which new brands are coming up on their shelves. Does it create pressure for HUL, Godrej, or another dairy company? That is one way to interpret signals.

Or take a personal example—if you find yourself increasingly ordering from Zepto, Swiggy, or Instamart, and you see the same behaviour in your neighbourhood, then you know it is not just anecdotal—it is a trend gathering pace.

So the Mosaic Theory for retail investors means observing what is happening on the ground, connecting the dots, and linking your personal observations with broader trends.

Kshitij Anand: …be more observant.


Nitin Bhasin: Reaching out to your friends in your network and saying, what are you picking up in your industry? Going just beyond the management call, beyond your own numbers and analysis, and beyond the television commentary of experts—actually going on the ground and seeing what is happening. Sometimes, simple things like this create massive wealth for an average investor.

Kshitij Anand: Now, let me also quickly get your perspective on IPOs, which are stealing the limelight right now. But not all that glitters is gold, as the past—or history, you could say—has taught us. So, what is your golden thumb rule for separating the hype from truly strong investment opportunities?


Nitin Bhasin: I do not think there is a very different approach required for IPOs. Remember, IPOs are an auction market, and there is a lot of capital available in India.

Many small and mid-sized companies, as well as private equity investors, want to sell their holdings into the market to raise capital—either for growth or to liquidate past investments.

For me, as an investment banker in my organisation, we also participate as advisors and bankers to a few IPOs. This is a good thing because, as a country, investors are becoming more mature.

Look at how business models have evolved—Sensex and Nifty compositions have changed since the 1990s and 2000s. Who would have thought a few years back that Zomato, essentially a classifieds company, would actually be in the Nifty? But that is the case today.


So, IPOs are good for India. In the US in the 1960s and 1970s, every small business was listed—even auto repair shops, QSRs, and burger chains. Why not in India?

We are now at that stage where IPOs will number in the hundreds. The last 12 months saw a bit less activity compared to the prior few years, but the bigger question is: are valuations right every time? And is every new business offering worth investing in?


Many investors tend to think that every new offering or new theme is something they must own. That is what investors should avoid.

We must go back to the same principles: look at the business model, assess management quality, and evaluate whether pricing gives you comfort—or whether you can find better opportunities elsewhere. There is always an opportunity cost to investing in IPOs.

I do not consider IPOs any different in approach. For institutional investors, IPOs are unique because this is often the only opportunity to buy into a company with a meaningful bet size.

Many global, high-quality investors have said one of the most important rules of investing is the size of the bet you put in.

If they cannot buy a stock in the open market in size, then everything else is just a paper idea. Hence, for institutional investors, IPOs offer a chance for meaningful participation.

For individual investors, however, the opportunity cost matters more. There are 500 listed opportunities in India—so why chase just one more? I am not saying IPOs should be avoided, but the framework remains the same: quality of management, the gravity of valuations, competitive advantage, and how the company could shape up in the future. Those principles never change.

Kshitij Anand: Now let us come to the heart of today’s discussion, which is the framework on investing. Can you walk us through what those are and how they can help retail investors?


Nitin Bhasin: I think we touched upon this earlier, but let me go into a little more detail. We can only speak from what we practice when we advise our institutional investors.

The first step, for both individuals and institutions (barring a few exceptions), is to have a reasonable timeframe. Whether it is three years, five years, or ten years, you must be clear about your horizon.

One concept we use in our asset management business is the Coffee Can Portfolio, which implies buying and holding for a long period of time. The sweet spot, in my view, is about seven years.

As Warren Buffett says, his sweet spot is forever, though I will not go that far. But I would say six to seven years is a good holding period for most companies.

So first, fix in your mind: what is the duration for which you are buying the stock? Second, ask yourself: if the stock falls 20%, 30%, 40%, or even 50%, would you still be able to hold it if you are confident today?


Then comes the real crux. We take the company’s last 10–15 years of annual reports. There is so much good business literature available. Spend time reading about the company.

Numbers often tell a very good story—sometimes aligning with management commentary, sometimes contradicting it. Look for those moments of congruence or dissonance, especially in tough times. How candidly did management explain the situation?

Go back and study history: numbers, commentary, management behaviour in good times and bad, and how they communicated with investors. That speaks volumes about management quality and evolution.

Then comes competitive advantage, or “moats.” No moat is forever. No advantage is permanent, because environments change.

Investing is not just about gathering information or having unique insights—it is also about imagination. Can this company survive future scenarios?


So: study the company’s history, numbers, and evolution. Then understand the competitive advantages. Are they based on brand, networks, monopolistic rights, or innovation? Think of companies that have remained relevant: Google, YouTube, Adobe, Asian Paints. Relevance often comes from innovation—whether in products, processes, or branding.

Finally, once you are done with all of this, look at valuation. For your holding horizon—say, five years—what are you paying for the fifth-year earnings? Always keep opportunity cost in mind.

This is one of the most underappreciated principles. Opportunity cost matters because, in the end, a 10-year G-Sec protects you close to or slightly above inflation, at least preserving value. Investing, by contrast, exposes you to the risk of losing capital.

So, you must be thorough. It is simple, but not easy. I think I got it right this time.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)