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00:00Sushant Bhansali, CEO of Ambit Asset Management joins us now on the show.
00:04Sushant, great to have you on and very good afternoon to you.
00:08Let's talk a bit about what is happening in the markets.
00:14Unable to sustain any kind of pullback and may be very influenced with what's
00:19happening globally right now. Do you see this rough patch persisting?
00:25We have seen a great bull run for last four odd years with a bit of time correction and
00:29consolidation in 2020-23. But since then from March 2023 lows, the markets have been quite
00:40bullish and there are dips which are quite minor, not more than I think a week. In fact,
00:47in 2024 itself we had a few such occasions, February, March and then during the elections
00:52and again last week when we saw some knee-jerk reactions. But one thing
00:58worth noticing across all these cycles in the recent past is that there is so much money
01:02waiting on the sidelines and which is why the recovery has been so quick and swift.
01:09We believe that the fundamental of equity investing has changed massively in this
01:15country in the last five-six years and the culture of equity investment is increasing
01:20every passing day and going down from tier 1 to tier 5 and tier 8 cities now.
01:27So, that's a big fundamental shift. The mutual fund penetration has been increasing massively
01:32and if things continue to do the same way for the next few years, then we'll have, I would say,
01:38massive expansion of equity assets in this country. The penetration is still very low. It's
01:43not even 4-5% from a savings basket perspective as per RBI data. So, there is still loads of way
01:52to go. Absolutely, I agree. A lot of way to go and that's what's led to the bounce back. But
01:57my question is how sustainable is it, Sushant? Considering that we were in a very different mood
02:02when the Nifty hit 25,000, since then struggling to stay above the 24,000 mark decisively. So,
02:10where do you think that next push is going to come from? Do you see financials coming back
02:14into play? Do you see consumption coming back into the play? Where do you see the next big bet?
02:23Definitely, I think IT has made a good comeback. Consumers, FNCG stocks have made a good comeback
02:29in the last couple of months and they should, I think, especially after post-election results,
02:34these two sectors have seen massive inflows and financials also are still, I would say,
02:40reasonably valued compared to many other sectors. And if you look at the 10-year multiples,
02:45the financials are trading at lowest multiples. So, these three sectors are there. Then there
02:49will be a few other sectors which are not very large but in pockets, let's say, chemicals and
02:56pharma. These are sectors, I think, which will continue to do well in the next year or so.
03:01Now, the mood at 25,000, I think, continues to be, I would say, same probably. This is equity
03:08and markets are not linear. They will not grow every day or every week. But if you take long-term
03:15trends and look at on a quarterly basis, I would say that the next few quarters will continue to
03:21outshine for India. Got it, Mr. Bansali. This is Harsh also joining in. So, sir,
03:28from whatever you've been saying, what I kind of gather is it's going to be difficult to see a
03:33significant fall at this point, at least. Where should the investor look or hunt for value,
03:41therefore? You've spoken about chemicals. Any specific names that you're looking at in terms
03:46of a good risk-reward at this point, given where markets are? And any other sectors, spaces,
03:52names that you're looking at? Most of the financials and chemicals
03:56are value peaks right now. Essentially, not because of any other reason, but because,
04:02especially in chemicals, the earnings have been disappointing. The CapEx phase has been, I would
04:07say, more or less behind us. So, earnings from here on should be quite positive and here on growth
04:13for the next couple of years in RU should do well. It is very difficult to play chemicals on a single
04:19stock name in RU because in this country, every chemical company is very different.
04:24They have different molecules and different salts to which they cater to in different processes.
04:29So, it's always good to have a basket of companies to play this sector. Financials, again, I would
04:36say that across banks and MVFCs, there are many options. Many of them are trading at, I would say,
04:42lifetime or probably at least 10-15 year low valuation range. And the business learning,
04:48at least there in that sector, has not taken any big hit. And even though there might be minor
04:55plunge in terms of NPAs in the recent past, but still well below, I would say,
05:01everybody's appetite in terms of managing the risk on the NPAs.
05:07Got it. And Mr. Bansali, I want to also quiz you with regard to some other asset classes. You're
05:13looking at gold. You're looking at certain other commodities as a possible investment. You're also
05:19looking at real estate. Do you believe that equity is still the way to go at these levels? Should one
05:27move to bond? Should one move to gold? Yeah. So, from Fishningham perspective,
05:34I think there is no long-term beyond 2-3 years if you take different asset classes. So,
05:42from that perspective, getting into fixed income booking at the yield which you are getting today
05:48is a no-brainer. We all will see falling interest rates. So, now, whether it starts in a few weeks
05:53or a few months, someday it will start and we'll not get these rates back for at least 2-3 years
05:58from now. So, a 3-year lock-in of that does definitely make sense. From an equity market
06:03perspective compared to gold and real estate, I would say that equity offers some unique benefits,
06:08be it fractionalization, which means you can invest any amount whether it's 50 rupees or 50
06:13lakhs or 50 crores or 50,000 crores. The market can absorb anything and provide you liquidity.
06:18Second is liquidity that the day you want to either enter or exit, equity, I think, outpasses
06:24every other asset class at any amount. The third is taxation benefit. Again, I think compared to
06:31other asset classes, although now with the new changes, it's not that different. But still,
06:35I would say the tax rates on equity are still much better than compared to real estate as such.
06:43And more importantly, I think, I would say the price efficiency is the best in equity markets
06:50because it's not just one asset class but within that asset class, various
06:54items you can get and the price whatever is quoted. So, in real estate, the same property
07:00can be sold at plus minus 10% or plus minus 20%. It will all depend on how you negotiate.
07:06But on stock markets, I would say that the price efficiency is quite, at a point of time,
07:14a price is there at which one can transact without getting worried that whether I
07:19got a good deal or a bad deal. Sushant, you know, the RBI governor today
07:25reiterated something that has been said for a while, a bit about it about how banks don't have
07:32enough pace of deposit growth. Some of it because household savings are not going to banks as
07:38they were earlier, maybe some of them coming to mutual funds, etc. And the second point about
07:43top-up loans, in some cases, being diverted towards other investments. He didn't mention
07:49derivatives or anything specific. So, my question to you is that you said you're bullish on
07:53financials. Doesn't this very fundamental point concern you, that deposit growth is not keeping
07:59up with credit growth and there doesn't seem to be anything in the picture that could change that
08:04dramatically? Yeah, that's there that if you look at from a 10-year and 20-year perspective,
08:12the rates are coming down, interest rates themselves are coming down. I'm sure most of
08:17these players, at least the efficient players will be able to protect their margins in long term.
08:21There will always be a difference between efficient and not so efficient players.
08:25But when those margins, net interest margins, if you look at it, will they
08:30dwindle down massively? Probably no. I think there will be, there is lots of penetration yet
08:35to happen at the bottom of the pyramid in this country where money is still kept in cash or
08:42probably not or in gold or many other asset classes. As financialization of savings happen,
08:49more and more money will come to capital markets and banks both. One can, both of them are linked
08:55to each other and cannot live without each other. So, we are not unnecessarily, I would say,
09:01looking at the NIM compression. There will always be temporarily bits and pieces,
09:06corrections which will happen, but long term trends don't seem to suggest that
09:11there is no business to be a bank or an NBFC now. Alright, thank you so much Mr. Bansali.
09:18It's been good speaking with you, good getting that perspective.