In this Q&A with Outlook Business, renowned private investor Vijay Kedia of Kedia Securities articulates his investing strategy, the sector that he likes the most, his take on the current market and the impact of Elections 2019. For investing insights, follow @outlookbusiness (https://twitter.com/outlookbusiness ) and log on to https://www.outlookbusiness.com/
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00:00 (dramatic music)
00:02 - Invest like a bull, sit like a bear,
00:11 and watch like an eagle.
00:13 So this is my strategy,
00:15 and I have one point strategy only,
00:18 and that is buy India and hold.
00:21 So I generally, I don't change my strategy easily
00:25 until and unless there is some valid reason
00:27 or some crisis kind of situation, I don't change it.
00:31 I've seen many elections,
00:32 I've seen many ups and downs in my life in stock market,
00:35 and election comes and election goes,
00:38 then again some election will come.
00:40 So I don't change my strategy,
00:42 I'm fully invested in this market.
00:45 And yes, presently, sometimes I actually,
00:49 I take leverage bet also.
00:51 As of now, I'm not leverage, almost I'm not leverage,
00:55 and I will just stick to my position,
00:58 and I will wait for the outcome of the election.
01:02 So that is my strategy, buy and hold.
01:04 I'm a mid-cap investors, okay,
01:06 so I'm investing in mid-caps only.
01:08 I certainly find a lot of value in mid-caps,
01:11 and again, when we say mid-caps,
01:13 doesn't mean that 5,000 shares.
01:15 So if I am following, say, 100 shares, so of course,
01:19 and if I am invested in, say, 10 or 20 shares,
01:22 so I certainly find value in those shares,
01:25 and I am happy to hold them,
01:28 in spite of election, in spite of anything.
01:31 (dramatic music)
01:33 I'm betting on a lot of sectors,
01:36 so I'm betting on India, as I can say.
01:41 But I like one sector, that is banking.
01:46 I think going forward, banking should do well,
01:50 and next bull phase, in next bull phase,
01:54 banking sector will play a significant role,
01:59 this is what I feel.
02:00 For the simple matter, that I think
02:02 worst in this sector is over.
02:04 The NPA situation, which was actually a drag,
02:08 and dragging the sector for last three, four years,
02:11 is almost sorted out.
02:12 Now looking at the growth in India,
02:14 looking at the growth in credit,
02:17 and even whenever this private capex will start,
02:20 so that will need a lot of money.
02:22 And bank is in the position to lend them,
02:27 because of, due to this ILFS and all,
02:33 this NBFC is also not in a good shape.
02:36 So, looking at all these factors,
02:39 I think that banking is the next big thing.
02:41 Banking is my best pick for the year,
02:44 and if you want to know about some particular stocks,
02:46 so I have already spoken in the last edition
02:48 of your magazine, so I would better skip,
02:51 I don't mention every now and then,
02:53 otherwise your audience will think
02:55 that I am marketing the shares,
02:56 so that is not my purpose.
02:58 For long term, as I said, that I am very bullish on India,
03:02 and I am fully invested, and in spite of whatever elections,
03:07 and whatever, I am fully invested,
03:10 and I think I will remain fully invested
03:12 for next five, 10 years, or till I live.
03:15 So I'm bullish on India, so I'm bullish on Indian economy,
03:18 I am bullish on stock market.
03:20 That's it.
03:21 Index has touched new high,
03:28 but according to me, this new high is meaningless,
03:31 because this new high is being supported by very few shares,
03:36 five, six, or seven shares.
03:38 So that is not the true picture of the economy,
03:40 nor that is the true picture of the market.
03:43 Okay, investors, especially the small investors
03:47 who are investing into mid-caps and all,
03:49 have lost a lot of money after 2018.
03:53 So this index is meaning,
03:55 this new high of index is meaningless,
03:58 until and unless there is a participation
04:00 from all sort of stocks.
04:03 So biggest risk is this.
04:05 That is why what I said,
04:07 suppose if expected result does not come,
04:11 then all these index stocks,
04:13 or maybe this large caps and all, will fall a lot.
04:18 And certainly, although mid-caps did not participate
04:22 in the rally, will also fall, but not to that extent.
04:26 So that is the risk in the market.
04:28 And so far, fundamentally, as you said,
04:32 that beyond election,
04:34 what are the main worries in the market?
04:37 So market is always worried.
04:39 Market and worries, they go together, okay?
04:42 Sometime it is in the form of crude,
04:44 sometime it is in the form of inflation,
04:47 sometime interest rate, or sometime what?
04:49 I think market is competent enough
04:52 to absorb all those shocks.
04:54 So market is only worried about the worries
04:57 which it cannot anticipate.
05:00 Unknown worries are more scary,
05:03 or makes market uncomfortable.
05:06 So let's see, things will change after the election.
05:10 Who comes, which party wins,
05:14 that actually will change the scenario.
05:18 So let us see, like suppose Congress wins, for example,
05:20 and as they are saying in their manifesto
05:23 that they will give 72,000 to everybody.
05:26 I don't know that what impact it is going to have,
05:29 what negative impact it is going to have on our economics.
05:32 That has to be seen.
05:33 You see, election is not my subject,
05:39 or politics is not my subject,
05:41 but I would still try to stick my neck out
05:44 and give you an answer.
05:46 So take it as a pinch of salt.
05:48 What actually market is expecting,
05:52 that BJP will win,
05:54 and Mr. Modi will be the next prime minister of India.
05:58 So it's a very tricky scenario.
06:01 Suppose BJP wins,
06:02 and Mr. Modi doesn't become prime minister again,
06:07 then I think this market will fall,
06:08 because as of now situation is such
06:11 that BJP means Mr. Modi.
06:14 So in that scenario, market may fall 5 to 10%.
06:16 In other scenario, suppose BJP doesn't win,
06:20 and Congress wins,
06:22 and if there is a prime minister from Congress side,
06:26 then again market may fall 5 to 10%,
06:29 because this market is actually, index-wise, is overbought.
06:32 And in third scenario, suppose Congress wins,
06:36 and the prime minister comes from their allies,
06:38 like if suppose my sister, or my didi, or my banji,
06:42 and some person like that become a prime minister,
06:47 I think in that case market will fall 10 to 20%.
06:51 It's a very tricky scenario, and anything can happen.
06:54 Let's see.
06:55 If market melts down,
06:57 then I think large cap will take the lead,
06:59 especially the index shares,
07:01 because as I said, this rally is actually
07:04 backed by large cap only.
07:06 Mid cap did not participate.
07:08 So in case of meltdown, all this large cap will fall.
07:11 And for another reason, that again this index was
07:15 actually led by the money came from FIIs.
07:18 So if something unexpected happens,
07:23 then they will certainly roll back their positions.
07:27 So large cap will be affected.
07:29 And as I said, maybe mid cap will also follow them,
07:34 but not to that extent.
07:36 (electronic beeping)
07:39 (dramatic music)