NDTV Profit | India Market Open | Live Business News
Transcript
00:00 just the past 5 trading sessions.
00:02 Hello and welcome.
00:26 You're watching MarketIQ on NDTV Profit.
00:29 I am Pallavi Nahata and with me is Alex Mathew.
00:33 Hi Pallavi and good afternoon to all of our viewers.
00:36 Let's take a check of how the markets are faring.
00:39 Just over the last half an hour or so, you've seen a bit of a down tick for the benchmark
00:43 indices.
00:44 The Nifty 50 trading at very close to the low point of the day and I must point out
00:48 that it has been a very narrow band for the Nifty 50 in trade today.
00:53 In fact, just about 65 or 70 points or thereabouts, it is in fact trading down about 0.2% or so.
01:01 The broader markets have also given up a bit of ground and in fact, you have the mid-cap
01:05 150 index, it's trading now with cuts of about 0.2% as well.
01:09 But the small-cap index continues to trade in the green.
01:12 You have the small-cap 250 that is staying in the green and up about 0.1% or thereabouts.
01:17 Let's take a look at some of the sectors then.
01:20 You have metal as well as media that are trading with gains right now.
01:24 In fact, the metal index is up as much as 0.7% or thereabouts.
01:28 IT is up about a third of a percent.
01:31 Among the key losers, you have Realty which is leading the declines on the sectoral front.
01:36 It is down about 0.9% or thereabouts.
01:40 Energy and Oil and Gas are also losing ground.
01:43 In terms of individual stocks and take a look at some of the key contributors on the Nifty
01:48 50 as well and I'm pulling some of those stocks up as we speak.
01:51 You have HDFC Life right on top of the screen that is doing quite well.
01:55 In fact, quite a few of the life insurance companies as well as the general insurance
01:59 companies doing well in trade today.
02:02 You have Ultratech Cement that is gaining about 2.4% as well.
02:05 You have Hindalco which is up about 2.3% and Bajaj Auto and Hero Motocorp both gaining
02:10 over 0.5% each.
02:12 Among the losers, you have BPCL that has continued to lose ground.
02:16 In fact, it has lost ground for few sessions in a row.
02:20 It is down about 3.7% or thereabouts in trade today.
02:23 Apollo Hospitals, Sun Pharma, Ayesha Motors as well as Titan all losing over 1%.
02:29 L&T, Coal India, NTPC, Britannia all over 1% losses in trade.
02:34 In fact, if anything the market breadth has turned just a tad bit.
02:38 If we can pull up the market breadth that will perhaps give you a sense of where we
02:42 stand right now in terms of the advance and decline ratio, I believe that that has seen
02:47 a bit of a change.
02:48 So, there you go.
02:50 In the last half an hour or so, you have seen more declines than advances and that tone
02:56 has shifted midway through.
02:58 But apart from markets, you are going to have a big focus today on macroeconomy and we are
03:04 watching for the CPI inflation data not just here in India, but in the US as well.
03:10 In India, we are likely Pallavi to see an uptick in the CPI inflation for the month
03:15 of November.
03:16 That's absolutely correct.
03:18 So, India's retail inflation is set to rise.
03:21 In November, a panel of economists polled by Bloomberg forecast inflation at 5.78% for
03:29 November that's compared to 4.87% we saw in the previous month.
03:35 And this rise is likely to be led largely by prices of onions, tomatoes and pulses.
03:42 So, core CPI inflation that actually excludes the impact of food and fuel is expected to
03:49 remain steady in November.
03:51 Now, retail prices of onions have seen a very sharp rise 60% month on month in November.
03:59 In December too, prices have edged down slightly, but the pressure on CPI is likely to persist,
04:06 particularly as the Rabi harvest is still some time away from coming into the markets.
04:11 Now also pulses like we spoke, in case of Toor Dal, price pressures have been persistent
04:19 for some time and are likely to persist even going forward.
04:24 Absolutely.
04:25 So, listening to a very short snippet by Shaktikanta Das on what he has to say on what's the expectation
04:32 from today's figures.
04:35 Since the last policy, CPI headline inflation moderated to 4.9% in October from 7.4% in
04:44 July.
04:46 The moderation was observed in all components of CPI, namely food, fuel and core, that is
04:53 CPI excluding food and fuel.
04:57 There has been broad-based easing in core inflation, which is indicative of successful
05:02 disinflation through monetary policy actions.
05:06 The near-term outlook, however, is masked by risks to food inflation, which might lead
05:12 to an inflation uptick in November and possibly in December.
05:18 All right, so that's more or less what has been predicted for the Indian print.
05:23 Now, we're also looking at the print in the US and that I think is something that a lot
05:29 of people globally are focusing in on because that is likely to have a bearing on the course
05:35 of monetary policy and the decision by the Fed, which is also later this week, in fact,
05:40 tomorrow Pallavi.
05:41 So, this print is all important from that perspective.
05:44 Absolutely, Alex.
05:45 So, essentially, in simple words, what we're expecting from the US inflation print is that
05:52 it will show signs of cooling, but it will continue to remain above the Fed's 2% target.
06:00 And more importantly, the cue that's expected to come in from this print for the Fed's meet
06:05 is that on expected lines, it's expected to provide the Fed enough comfort to hold rates
06:11 steady.
06:12 So, it's pretty much thought to be a given from this meet.
06:15 Absolutely.
06:16 And in fact, there are still question marks about when the rate cycle will turn, with
06:23 the jury out as to when the cut will happen, because if you've been paying attention and
06:28 you've looked at some of the headlines on this platform as well, on this channel as
06:31 well, we've told you in the past week, you saw that the jobs data was actually better
06:37 than expected on Friday and that really points to resilience in the US economy, which really
06:43 has been the talk of the town all of this year and could in fact head into next year
06:48 as well.
06:49 Let's talk about a few stocks that you should watch out for.
06:52 And in fact, one of them has to be IREDA.
06:55 It has gained about 60% or thereabouts in just the past five trading sessions.
07:01 It is up as much as 18.5% in trade today.
07:04 And that's partly because the government is considering Navratna status for the company,
07:09 but also because of the tremendous potential that is visible in the lending space for renewable
07:15 energy going forward.
07:16 We spoke with the chairman and the managing director of the company, Pradeep Kumar Das,
07:21 and this is part of what he had to say.
07:23 Listen in.
07:24 We are financing to this space, particularly agriculturalists.
07:27 Our yield will keep at a very minimum level.
07:31 Because our portion of the asset portfolio will not be that much.
07:35 Because we have started the retail year back.
07:38 Now we will be fully putting it in a dedicated division.
07:41 If required in time to come, we can have a completely different entity.
07:44 Maybe it is a volume subsidiary or a subsidiary by jointly getting into this space with others
07:50 also.
07:51 So our object is to make a fair amount of awareness and bring down the perception, risk
07:57 perception.
07:58 The perceived risk should be out, the genuine risk should be captured.
08:01 That will be our approach to focus.
08:03 Let's take a break.
08:05 Stay tuned.
08:06 We'll be right back.
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10:46 Welcome back.
10:52 You are watching MarketsIQ on NDTV Profit.
10:55 Now, we are looking at the screen and the nifty-fifty is trading with cuts of about
10:59 30 points or thereabouts, down about 0.1 percent.
11:02 And from the broader markets, there are a few stocks that have been buzzing.
11:05 There is, of course, Dixon Technologies, which is now up only about 0.2 percent, but which
11:10 was higher earlier.
11:12 It's lost quite a bit of ground.
11:14 And quite a few of the insurance companies, so the likes of GIC, which is up at this juncture
11:19 still about 4.8 percent off the high point of the day.
11:22 And you have HDFC Life, which is also gaining about 2.5 percent.
11:26 But another stock that we've been looking at closely is Blue Dart.
11:30 It is currently up about 0.4 percent and that's after the aviation arm that the company has
11:36 has purchased two aircraft from its subsidiary DHL Aviation Netherlands.
11:41 We spoke with the managing director of the company, Balfour Manuel, and we asked him
11:46 about the company's plan and what the company has in store with regard to the government's
11:54 Gatishakti initiative.
11:56 Listen in to what he had to say.
11:58 The two new aircrafts are more fuel efficient.
12:02 These are 737s.
12:04 And the intent is to go deeper into tier two, tier three locations where smaller aircrafts
12:10 serve the purpose better.
12:12 And also in line with the government's policy, you know, the Gatishakti and all those policies
12:20 support growth in reaching express logistics and in entirety the logistics to improve in
12:29 the country.
12:30 I think it's just in tandem with that.
12:34 That's the plan.
12:35 The marriage season has boosted consumption and edible oil volumes are growing at a robust
12:43 20 percent.
12:44 That's according to Adani Vilmer.
12:46 My colleague Sesha Sen spoke to the MD and CEO of the firm, Angu Malik, on the sidelines
12:52 of the CII FMCG summit.
12:54 Here's a slice of that conversation.
12:57 Globally, the edible oil prices have come down.
13:02 And today the prices are almost at the bottom.
13:08 These prices are very comfortable for the consumers to buy.
13:11 And that is why you can see higher consumption story, both in urban and rural.
13:17 We are seeing a growth of almost 20 percent in edible oil consumption by volume, which
13:22 is not heard of.
13:24 Normally, it should be 8 to 10 percent, but now it's more than 20 percent.
13:27 So that means people are consuming.
13:29 Prices are comfortable.
13:31 Out of home consumption has increased because of the big marriage season and very huge consumption
13:36 of edible oil in the marriages.
13:38 As far as margins are concerned, you see our margins are not the basis price.
13:45 We go on per ton basis or per kilo basis.
13:48 Our margins are basis that.
13:51 So even if the prices goes up or comes down, we generally keep it within the limits of
13:58 our bottom line and top line, balancing it with the overall objective of meeting our
14:04 bottom line targets.
14:06 But we are very conscious about the market share.
14:09 So we do pay more attention towards market share.
14:13 So what is the bottom line target?
14:15 I can't tell you about the target because it's all product wise.
14:19 It is region wise target.
14:21 But by and large, the present situation gives us a lot of comfort in terms of hedging at
14:29 the right price, getting the hedge correct.
14:33 Overall, buoyancy in the market consumption with higher volume, lower cost of operation,
14:39 lower per head cost of whether it is manpower or fixed cost or anything.
14:45 So overall, the cost is low.
14:47 So we have always seen the volume growth is good for Adani Vilmar.
14:52 However, if you look at the distributors, there is a growing concern that they are kind
14:58 of piling up on excess stocks.
15:00 It is not selling.
15:02 What is it that is slowing the general trade?
15:05 Is it the shift towards the e-commerce, a major factor that is playing out or is it
15:10 something else?
15:11 How do you see this?
15:12 See, one has to see which product you are talking.
15:16 During Diwali, what happens, there is a lot of schemes for the retailers and in our business,
15:22 we call it dumping of stocks.
15:25 Now dumping of stock is common during festivals because you ensure your retailers are packed
15:31 with your stocks.
15:33 This is good for other FMCG products, not good for food because our food product needs
15:38 shelf life are small.
15:40 So they need to be faster turnaround.
15:42 So in atta, we want 7 to 10 days.
15:45 In sugar, we give 7 to 10 days.
15:48 Oil, we give 7.
15:49 And every week we go and cover.
15:51 We also don't want them to take more stock because the price volatility is there.
15:56 So we don't want them to be caught in any wrong thing.
15:59 So we always give lower stocks and we keep them faster movement of stocks.
16:04 Got it.
16:05 So, you know, I would also like to know from you in terms of the institutional demand,
16:10 how is it looking like?
16:12 I think this year is fantastic.
16:14 Shesha, the number of marriages you see and you see how Indian big fat wedding is happening
16:22 and now what is it that is consumed?
16:25 Kashmiri rice, edible oil, maida, sugar and we are there in all the products.
16:32 So Indian weddings are a big consumer of essential commodities like this.
16:39 Hotels are running full and you see the reservations are not available.
16:43 Banquets are full.
16:44 Any marriage gardens are full.
16:46 So all this put together gives a lot of buoyancy on the consumption of essential.
16:51 This will continue till April 15th.
16:54 So we have a very big marriage season this year.
16:57 Any growth projections that you keep for the institutional demand?
17:00 See, normally, overall the company is growing at around 20% on edible oils and 30% on food.
17:09 All including the out of home consumption.
17:12 I think we should continue with it and do equally well.
17:23 Alright, now at the same FMCG summit, our colleague Mahima spoke to Reliance Retail's Damodar Mal
17:30 and she asked him about the trends that he witnessed during the festive season
17:35 and this is what he had to say.
17:37 So what according to you are the modern trade trends as of now?
17:44 We are seeing in our world that I call super market India,
17:50 which is digital modern retail and physical modern retail.
17:54 We are seeing bullish trends both in terms of increasing consumption
18:00 as well as premiumization in all categories.
18:04 So sir, if you see the Indian customer base is slightly price sensitive
18:09 and they always look for discounts.
18:11 What do you think is the discount game and do you think that discount is the key growth driver?
18:17 As I said, modern retail lives on the fact that we premiumize all categories.
18:23 We are the place where people with their higher incomes,
18:28 they express their higher incomes through small joys of life.
18:33 Deals and discounts is a nice background to provide when people are up trading.
18:41 So it's best when we sell doves to a shopper of Lux or Hamam,
18:50 but we wrap the dove in a value deal of the day saying if you buy two,
18:55 then I'll make it interesting for you.
18:58 So deal is a way of getting attention of the customer on digital or physical modern retail platform.
19:06 It's a good thing because it helps the customer's guard go down
19:11 and they express themselves better through what they purchase.
19:15 Also sir, we've just seen that the festive season has just ended.
19:19 What are your observations? What are the festive trends that you have observed?
19:22 In the supermarket business that we run at Reliance Retail,
19:29 the entire festive season has been very positive.
19:34 Both in the core categories like dry fruits and everyday staples,
19:40 as well as aspiration categories for gifting and premium gifting,
19:46 as well as branded sweets, etc. We've seen very bullish trends.
19:51 Thank you so much, sir. Thank you so much.
19:54 And with that, it's time for yet another break. We promise to keep it short. Stay tuned.
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21:01 Thank you for watching. We're back.
21:06 Spandana Sfurti has released its Vision 2028 document.
21:10 Their assets under management are expected to rise from Rs. 9,800 crore to Rs. 28,000 crore by FY28.
21:21 The management of the company spoke to us about their growth. Listen in.
21:27 Suffice to add, I think, you know, we've been doing reasonably well.
21:30 So, you know, we are already midway through and about almost about 80-90% of the parameters that we had laid down for ourselves.
21:42 We are almost there. You know, we are in the green as far as that part is concerned.
21:46 So the vision articulated in that document, I think we'll be able to achieve the targets by end of FY25,
21:53 which is still six quarters, slightly less away.
21:55 We thought this was the time for us to now come because people, the stakeholders used to ask, you know, what next?
22:04 We also time flew. We didn't realize that, you know, we are already midway through.
22:09 So we started work on the FY28, which is the Vision 2028 document that was a Vision 2028 plan that you're talking about.
22:17 So broadly speaking, we are going to grow our microfinance business. Number one.
22:24 Number two, we are going, we are, we've already diversified into two new businesses.
22:32 One is the loan against property. And the second one is our nano enterprise loans.
22:37 Both of these have nothing to do with microfinance.
22:40 They are a separate line of business, a separate set of people.
22:44 The reason why we thought it is important that we get into these two business lines is one,
22:49 it lends some balance because the loan against property comes with a secured tag.
22:54 That's number one. Number two, we feel that there's a genuine opportunity which exists in the market,
23:00 which is the missing middle, because these numbers are too low.
23:04 Our average ticket size in a loan against property is about five lakhs.
23:07 This is too low for a bank. So where do these customers go?
23:11 Likewise, you know, the nano enterprise loans, where will the customers who need only a one lakh rupees or 120,000 rupees,
23:17 where will they go? With this in the background, we thought that, you know, we will kind of,
23:23 we will expand in these, in this business line.
23:28 Microfinance obviously remains the core, which is the bread and butter.
23:32 I heard you when you said that it is a pretty aggressive number, but standalone, it looks to be a big number.
23:39 But when you look at the CAGR, we are talking about 20 percent year on year.
23:44 The industry is slated to grow roughly at that number.
23:48 So I think we will be in line with the industry.
23:51 I have been saying in various forums that microfinance is a risk management business.
23:57 It is not an asset management business. So if you manage the risks well,
24:02 this is a good business to be in. It will continue to deliver profitability for the enterprise in a sustainable way.
24:09 And that's what we are progressing on.
24:13 All right. And that brings us to the end of this particular edition of Markets IQ.
24:17 It's been a pleasure bringing it to you. Do stay tuned.
24:20 In just the next few minutes, you will find a conversation on the Mutual Fund Show with Kotak Mahindra AMC's Nilesh Shah.
24:28 This is NDTV Profit.
24:30 [Music]
24:44 Crossed the threshold of 17,000 crores a month.
24:47 It is the year where the number of accounts and folios opened also crossed new highs.
24:54 Will we continue to see that kind of wealth creation in SIP?
24:59 What is the message beyond mutual fund?
25:02 To speak on this, I have a very special guest right here in the NDTV Profit studios.
25:08 Please help me welcome Mr. Nilesh Shah, Managing Director at Kotak AMC.
25:13 Nilesh bhai, thank you so much for speaking with us today.
25:16 Thank you, Tamina, for having me here.
25:17 And coming to our studios right, you know, as we start off this journey on NDTV Profit.
25:23 Thank you so much for that.
25:25 Let me…
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26:01 From urban India, we have now become part of semi-urban and rural India.
26:07 We have miles to go, but the journey has begun.
26:10 From rich Indians, we have become part and parcel of middle class Indian and we have to go to bottom of the pyramid.
26:18 And more importantly, mutual fund investors have become fairly matured.
26:23 In one line, if I have to summarize that maturity, earlier when market used to correct,
26:29 we used to go to tell them and convince them, stay invested, long-term India is good.
26:34 Now, when there is a correction, they come and tell us, don't worry, we are sending money,
26:40 just clean out all the foreigners and long-term India is good.
26:44 That's the change in Indian investors.
26:47 Now, the question is that, are we going to continue to see the kind of returns by and by,
26:54 especially the end of the year has been very robust for equities, for equity returns in mutual funds.
27:01 I am just talking about the equity portion of it.
27:04 And we have seen a consistency in SIPs coming in.
27:07 Investors at some point or the other are going to start seeing their returns and how the returns are constantly growing.
27:14 Do you see the space of growth continuing into 2024 as well?
27:18 So, the returns will be volatile.
27:20 Everything is good about mutual funds provided you can pass the Agni Pariksha.
27:26 And once in a blue moon Agni Pariksha, everyone has to give.
27:31 In March 2020, my SIP returns for three years were negative.
27:35 Five years SIP returns were lower than savings bank account.
27:39 And 10-year SIP returns had halved to be less than bank fixed deposit return.
27:45 But investors who pass through that Agni Pariksha, who took that pain of underperformance today,
27:51 are looking at 15-20% compounded return for 15-20 years.
27:56 So, undoubtedly, there will be volatility and variation in SIP returns, mutual fund returns.
28:02 There will be period when we will have to go through Agni Pariksha.
28:06 But if you pass through that, you will get a lot of money, you will get a lot of return.
28:12 Do you think that Agni Pariksha is coming in this market after the kind of run-up we have seen?
28:17 As of today, it looks very, very difficult.
28:20 Indian markets are seeing earnings growth.
28:23 A very well-known global investor told me when I presented to him that India looks expensive on a one-year basis from a valuation point of view.
28:32 He said, "Nilesh, I think long term, on a five-year basis, India is the cheapest emerging market.
28:38 So, there is earnings growth better than peers.
28:41 Second, there is also governance.
28:43 Our governance standards are better than probably most emerging markets.
28:48 And finally, there is green transformation.
28:51 India is the lowest per capita carbon emitter in the world.
28:55 Where will you get combination of 3G, the growth, the governance and the green?
29:01 So, I don't see Agni Pariksha happening in the near to medium term future.
29:06 But will India never see Agni Pariksha?
29:08 Answer is no.
29:10 There will be days when we will have to go through Agni Pariksha.
29:13 Most probably for an external reason like COVID or geopolitical risk, then internal reason.
29:21 Now, over the year, another trend that we have seen is the acute interest in small and mid-cap funds.
29:30 And the kind of fund flows we have seen in these funds has been multiple times more than in large cap funds.
29:39 What do you think is the reason for that?
29:40 Do you think it's a good choice for investors and will that continue?
29:44 Because you had also in July of this year, some funds would stop taking lump sum amounts beyond a certain point.
29:50 Is there a concern on froth building up?
29:53 So, a lot of money in small and mid-cap fund is driven through SIP, which comes at the top as well as bottom of the market.
30:02 It's not just lump sum investment.
30:04 Second, there are many investors who are booking profit on the direct holding of small and mid-cap and putting into mutual funds,
30:12 saying that mutual fund managers will be more professional in managing this exposure.
30:17 So, it's not that all the money into small and mid-cap is coming just looking at the past performance.
30:23 Many are coming with eyes wide open.
30:26 My feeling is that in Indian market today, there is combination of growth, governance and green.
30:34 There is a pocket of exuberance where floating stock is limited.
30:38 Ownership is controlled in few hands.
30:41 They are reluctant sellers and hence even small buying is pushing prices higher and valuations becoming unreasonable.
30:49 Bearing that portion of low floating stocks, I think rest of the market is still fine.
30:56 There will be undoubtedly ups and downs, but a patient investor, a disciplined investor will make money in our market.
31:03 It is also an increase in responsibility, wouldn't you say, of the fund manager in recent times
31:09 because of the volume of money coming in and from all sections of society.
31:14 The scrutiny has increased on where those investment decisions are being made.
31:19 I am speaking in the context of recent IPOs.
31:22 Some have done very well, some, you know, a question for the amount of money mutual funds put in.
31:28 Do you think that that scrutiny is welcome or does it put the fund manager on edge?
31:34 That scrutiny is welcome.
31:36 A large part of my investors are knowledgeable.
31:40 They know what they are doing.
31:42 There is a significant part of my investors who are investing money based on our brand, our name, our reputation.
31:50 We are managing their dreams. We are managing their aspirations.
31:54 My mother was a widow and she, you know, worked for the outside world doing all kinds of part-time works to grow us,
32:03 to make us, you know, eligible to participate in the world.
32:07 There will be so many widows whose dreams I am managing.
32:10 I have to be under constant scrutiny.
32:12 I am accountable for them and that scrutiny keeps us on our toes.
32:16 That scrutiny brings us back to the ground saying that it's not the rich people for whom we are managing money.
32:23 It's also the people whose dreams, aspirations we are managing.
32:26 So, scrutiny is always welcome. It keeps us on the toes. It keeps us accountable.
32:31 Having said that, do you think there is also a requirement to be careful at a time when there is so much excitement in the market?
32:43 You know, a lifting tide raises all boats.
32:46 Some of these companies may not deserve the valuations they are seeing.
32:51 How will those decisions be made?
32:53 And are you right now a little worried about some extent of froth building up?
32:58 Undoubtedly, valuation is art. It's not a science.
33:02 What I believe is expensive might look cheaper to someone.
33:07 What I believe is cheaper may look valued, trapped to someone.
33:12 But as a professional fund manager, I have to ensure that I don't go and invest into unreal businesses.
33:18 In 2000, there were many companies who just changed their name from XYZ Finance to XYZ Tech.
33:24 And fund managers bought into it.
33:27 That mistake we can't allow.
33:29 In 2000, I was told by an investor that, "Nilesh, I don't make those mistakes which I can commit on my own.
33:35 When I come to a professional, you should make some different mistake."
33:39 I think that was a very, very valuable lesson for me.
33:42 And wherever I have gone, I have ensured that we don't make the same mistake.
33:47 We have to invest in real business. We have to beg good promoters.
33:51 We have to stay with management through ups and downs.
33:54 And we have to communicate to the investors what we believe genuinely is the potential risk-return trade-off.
34:00 Just don't portray the return of small and mid-cap and hope to collect money.
34:05 We have to portray both risk and return together.
34:08 There was a circular recently also limiting the amount of returns that mutual funds can show.
34:16 And you have to peg them now to the index.
34:20 So, just taking forward the point about scrutiny and of course, the mutual fund industry is now a caretaker of people's wealth and aspiration.
34:29 And I'm talking about as a whole.
34:32 How do you think these expectations can be managed?
34:37 And do you think that there is enough latitude to truly make those kind of returns for Indian investors?
34:44 Do you think that ability and that potential exists in the market right now at these levels?
34:49 So, sunlight is the best disinfectant.
34:52 Transparency is the best disinfectant.
34:56 And mutual funds are the most transparent financial services in the entire country.
35:01 Our expense ratios, our portfolios, our performance, everything is available at the tip of a click.
35:10 As long as we are transparent with investors, they'll be able to take informed decisions.
35:16 There's a set of mutual fund distributors which are taking mutual funds performance and risk return trade-off to investors.
35:23 So, we believe we are in the business of managing trust and confidence of people.
35:29 Transparency is the best way.
35:31 There are times when we have lost money for investors like in March 20.
35:35 But people actually give us more money to invest.
35:39 There was a time when one fund stopped redemptions.
35:43 But despite that, other funds didn't face pressure beyond a few days once we reached out to them.
35:49 That trust, that confidence that even when chips are down, even when performance is bad,
35:54 even when Agni Pariksha is going on, I can trust this fund manager, I can trust this fund house.
36:00 I think that trust we have to maintain and that's only possible through transparency.
36:04 What do you think has been responsible for this switch in investor mindsets?
36:09 Because you're absolutely right.
36:11 There was a time if markets had even a little bit of a dip, people used to start scrambling to redeem.
36:17 Now, they're scrambling to put in more money.
36:20 What do you think is responsible for that switch?
36:22 So, a lot of credit should go to mutual fund distributor and advisor.
36:26 They have hand-held the customers and shown them how volatility does not really impact their long-term goals or long-term performance.
36:35 Secondly, as mutual fund industry, very few blemishes have behaved quite responsibly.
36:41 In fixed income in 2003-2004, when interest rates had bottomed out,
36:47 we returned money in duration to investors by calling proactively.
36:51 My fixed income fund was down about 90% from top because I went and advised investors not to invest in duration funds.
37:00 I was not the only fixed income fund manager doing it.
37:03 All my counterparts in other mutual funds did the same thing.
37:06 I think over a period of time, we have been able to get the trust and confidence of investors.
37:12 We have been able to showcase them that India is such a great growth story that every correction is an opportunity to buy.
37:21 And March 20 was the real icing on the cake.
37:25 Foreigners sold about 65,000 crore of equity and local investors just leapt it up.
37:31 It got repeated in mid-2021-22.
37:34 They sold $35 billion of equity.
37:36 Markets corrected about 10% and everything was absorbed.
37:40 This has resulted to a fundamental shift in Indian risk premium.
37:45 We were about 1.4 times emerging market peers in terms of beta or volatility.
37:51 Now we are 0.6 times because our domestic investors' participation via mutual fund have built that base.
37:58 So in segment one of this show, we talked about the macro picture, but we're going to take a very short break.
38:04 When we come back, we will ask Nileshji what exactly you should do, what should be your strategy as a mutual fund investor.
38:13 Stay tuned for that.
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40:11 Welcome back. You're watching the Mutual Fund Show.
40:13 And we have with us in studio today a very special guest.
40:17 Nilesh, before the break, we talked about this sort of paradigm shift in the mindset of mutual fund investors in India,
40:24 where they don't panic at every downtrend and they, in fact, want to put in more money.
40:29 Now, the question is, investors watching this may be wondering, what do you do when markets reach these kind of valuations?
40:37 You generally do see a run-up statistically before Lok Sabha elections.
40:41 The last six months, you see some kind of a run-up.
40:43 Is this a good time to put in fresh allocations apart from any SIPs that have been continuing, which are for a longer-term perspective?
40:52 Or would you advise people to wait? What would be your outlook on equity and debt kind of a breakup?
40:59 So, whenever you have cash, that's the best time to invest.
41:03 If you are an investor, it really doesn't matter whether you're investing today, tomorrow, or the day after tomorrow.
41:11 It's a long journey. I mean, imagine one day we'll be able to tell our kids that, look, when India's market cap was just $4 trillion,
41:21 I invested, and today it is $40 trillion. We have got 10x return.
41:27 It will be very unfair to go and tell your kids that, look, index was 20,500, and I was waiting for correction to come to 20,000 so that I can invest.
41:36 And in the process, I ended up missing the bus.
41:39 So, whenever you have cash and whenever you have long-term horizon, just blindly go and invest.
41:45 Now, this doesn't mean that you don't focus on asset allocation.
41:49 There are two ways to do asset allocation.
41:52 One, give the responsibility to professional fund manager.
41:57 Most of us have done asset allocation fund for last 15-20 years.
42:02 They have delivered fantastic return to investors by dividing between debt, equity, and gold.
42:07 That's one lump sum investment. Shut it. Forget it.
42:11 The second is that you can do asset allocation on your own.
42:15 At today's point of time, in fixed income, we'll recommend go for duration.
42:20 Interest rates are peaking out, and in one, one and a half years, they may start coming down.
42:25 On equity, we'll recommend people to go long, large cap and larger mid caps rather than micro caps and mini caps or sectoral fund.
42:35 So, if you don't want to do asset allocation on your own, share the responsibility with fund managers through their asset allocation fund.
42:43 And frankly speaking, now you have a variety of asset allocation funds available.
42:48 There's equity savings scheme, which is division between debt and equity.
42:54 There's balance advantage fund, which is also between debt and equity.
42:58 And then there is multi asset allocation fund, which is between debt, equity and gold.
43:03 So, you choose what is suitable to you.
43:05 You know, in terms of choice, and I'm glad we're talking about this as well,
43:11 the amount of or the array of choice is now dizzying for investors.
43:16 A lot of new players are also coming into the Indian market.
43:19 A lot of new funds are going to be available and not just from the established houses,
43:24 but obviously, there's a beeline being made for Indian investors.
43:29 What would be your advice to those trying to navigate this?
43:34 Every second day, there is a new fund with a new title.
43:38 How do you actually sift through what is looking like a very promising title, whether it's whatever it might be for growth,
43:45 for your child's future, it could be labeled anything.
43:48 How do you make sure it's something that is worth your money?
43:51 So, one, you know, Tamanna whenever we go out for lunch, dinner,
43:56 there are multiple choices of restaurants available.
44:00 And within a restaurant, if you go, there are multiple cuisines available.
44:04 How do we choose? In places where we don't have connect, we go by brand.
44:11 We go by reference on Swiggy and Zomato.
44:15 We go by hearsay and recommendation of friends.
44:20 The same thing is applicable in mutual fund.
44:23 Over here, you can rely upon a brand.
44:26 Over here, you can rely upon a reference from a satisfied investor.
44:30 And over here, you can rely upon your mutual fund distributor or advisor.
44:35 The way of selecting your restaurant versus way of selecting your mutual fund remains the same.
44:41 The reference experience brand, it's the same thing.
44:45 So, in terms of that reference experience and brands,
44:49 what do you think the expectations should be for investors?
44:54 Because they're going to be looking at index returns.
44:58 They're going to be looking at mid-cap index returns and expecting the same,
45:02 if not more or thereabouts from their fund returns.
45:06 Do you think that's fair?
45:08 So, it will be extremely unfair.
45:11 As an investor, your first priority is to get alpha or value over benchmark index.
45:19 You will invest in a fund manager only if they are giving additional return over benchmark index.
45:25 It won't be possible every day, but over a cycle, over a period of time.
45:30 Second, as an investor, it is your responsibility to ensure that the fund return and your return is similar.
45:38 We have seen, on an average, an investor's return is half of the fund's return
45:44 because they keep on jumping on what is better performing in the past.
45:49 Don't make that mistake.
45:51 Stay invested for value-add, stay invested for long-term so that fund return and your return could match.
45:57 Just as we wind up this conversation, your outlook for where the markets are going to go.
46:03 Nowadays, it's in vogue to have a number in mind.
46:08 Sensex at 100,000. What are your numbers?
46:12 Are there any numbers that you want to talk about for 2024?
46:17 As long as I can predict either the date or the index, I can't predict both.
46:22 Frankly speaking, there's no point in predicting what will happen to the market in one year.
46:29 Time and again, we have seen forecasts going wrong.
46:33 In January 20, I had no idea COVID will hammer the market like this.
46:38 In Jan 21, I had no idea Russia, Ukraine will happen.
46:43 So, it's impossible to predict market.
46:47 When you are investing in equity, don't take one-year view.
46:50 Take a view that India today is 3.7 trillion dollar economy.
46:55 One day, it will become 40 trillion dollar economy.
46:58 India's market cap is today 4 trillion. One day, it will become 40 trillion.
47:03 I want to participate in this.
47:05 In that participation and in that very large picture, of course, what are the themes that you see working?
47:15 We talked a bit and I think you touched just a bit about how large cap funds are now looking interesting
47:20 because they perhaps have not participated as much.
47:23 Large caps have not participated maybe as much.
47:26 Are there some sectors and themes that you see persisting in this growth story?
47:31 Two things will always work. One, quality. Second, valuation.
47:37 What do I mean by quality?
47:39 A business which generates more return on equity than cost of capital.
47:44 Which is run by minority shareholder friendly management.
47:49 And which has some amount of moat, some amount of competitiveness.
47:54 So, by and large, good businesses one should buy.
47:58 Second is valuation. Everything has a price.
48:02 If I am paying a reasonable price for a quality business, I think we have hit the jackpot.
48:08 The rising tide of India will lift every boat.
48:11 You have to ensure that you are not in a boat which has a hole of misgovernance in it.
48:16 Any final closing comments and advice for our viewers who are watching
48:21 and who are wondering how to make the most of mutual funds?
48:24 Remember, right now, a lot of people also want to dabble on their own in stock markets, in futures and options
48:32 and maybe have a little bit of a sip going on the side.
48:35 What would be your advice to them and your strategy to them as we go forward?
48:41 So, my recommendation to investors is that there is no shortcut to success.
48:46 Otherwise, all of us would have become billionaires.
48:50 There are 18 crore Indians who have dabbled in crypto to lose money.
48:54 There are more than 2 crore Indians primarily in the bottom of the society
48:59 which have invested in Ponzi scheme to lose money.
49:03 There are crores of Indians who do gaming, matka and all kinds of things to make money.
49:11 Making money is like Birbal ke khichdi, pakne mein time lagta hai.
49:15 Be a long term investor, be a disciplined investor, be a regular investor.
49:20 I can assure you that mutual funds will provide you financial security, will provide you financial freedom.
49:27 That's a faith a lot of investors have shown at least in 2023 and I'm sure it will continue
49:35 because of the kind of returns and trust that mutual fund industry is bringing forward
49:40 and of course, big names like yours.
49:42 Thank you so much, Rilesh Bhai for speaking with us today on the show.
49:46 Thank you.
49:47 Thank you.
49:48 Thank you.
49:50 Thank you.
49:52 Thank you.
49:54 Thank you.
49:56 Thank you.
49:57 Thank you.
50:05 Thank you.
50:15 Thank you.
50:26 Thank you.
50:37 Thank you.
50:45 Thank you.