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00:00Let me quickly welcome on board Anirudh Garg, partner and fund manager at Invasat TMS
00:06to talk to us about his views with regard to where markets are at. Welcome, Anirudh.
00:11You know, first off, just with regard to how markets have been, they've been buoyant,
00:16you expect this kind of run to continue or you expect some bit of correction
00:21or a sideways movement, a time-wise correction? What's your sense?
00:25A very good afternoon to all the viewers of NDTV Profit. Thank you for having me.
00:30I believe that somewhere our markets have run up a little bit more than what was justified
00:37and other markets like US and all, they have some catching up to do. So we believe that though
00:44we are not seeing a major correction coming through, but yes, you could see some sideways
00:49movement until legats like the Banking Index, the Bank Nifty and the others catch up.
00:55So we believe that the momentum in the market has shifted from, you know, the capital goods and
01:02CapEx themes and all the themes that were out there to somewhere for where the value was.
01:07So we believe going forward, the new economy part of the market, which is
01:12IT and FMCG and all, they would now take control of the gas and Nifty as compared to
01:21other indexes, especially the US, should be a little sideways and underperformed.
01:29You know, Anirudh, it's been a very theme-centric market. You've seen banks at times underperform
01:36for long periods. You've seen certain sectors underperform for long periods and thereafter
01:41come to the fore, do very, very well over a period of three to six to 12 months.
01:45We've seen that real estate has done very, very well. We've seen railways,
01:49the CapEx play is doing very well. We've seen cap goods do very, very well.
01:54What's your pick? What's the next round of rotation going to be like? And which are those
02:00spaces where there is still value? Sure. So see, how we believe it in
02:06that this is primarily an old economy run. The basic theme of the run is an old economy run,
02:12in which you have only two things to participate. It's either interest rate sensitives to
02:16participate, or you will see capital expenditure coming forward. This time, it was very, very clear
02:22that as far as interest rates are concerned, which require, you know, global growth and global
02:26inflation under control, both of which were a problem for the last couple of years. They did
02:31not participate as much as was expected. When it comes to CapEx, CapEx did wonders for the Indian
02:36economy, thanks to the buoyant budgets of the Indian government. Going forward, I believe that
02:41somewhere based on risk reward ratios for every sector that we have, we believe that they have
02:47run up a bit too much. And there is a scope for sideways to price correction in the sectors that
02:53have outperformed till now. Somewhere we feel that the new sectors which have not performed
02:59in the last few years, something like an IT or an FMCG should, you know, take the reins.
03:05We believe pharma at this level is also a bit overvalued and has run up a bit more than expected.
03:13But they're all, you know, the views. But yeah, in terms of the leaders that were till today,
03:18we are seeing a major shift happening from capital goods, railway, railways, defence,
03:24infrastructure, power, to safer defensive sectors like FMCG and IT as a tool.
03:31So you're buying into, you're buying into large cap IT, you're buying into ER&D,
03:38you're buying into mid cap IT or you're buying into IT enabled businesses?
03:43Okay, so high needed for us, we are buying into primarily large cap IT, because we move to these
03:50defensive sectors to take a protection in overall expensive markets, and also to, you know, take an
03:59advantage from the underperformance that they have had till today. So primarily, we are buying into
04:04large cap IT and very specialized IT, which is concerned with doing newer things. For example,
04:10somebody is into designing electronic vehicles and their parts and their R&D. So we are into
04:19such sectors in IT specifically, where things are changing, they are catering to something new.
04:24Apart from that, we are buying large cap IT. Okay, so the other aspect is,
04:32with the Fed rate cut around the corner, should some of the global facing sectors be a part of a
04:39tactical portfolio? You may not keep a tactical portfolio, but I'm just trying to understand,
04:44if you had a choice, would you do that? Yeah, actually, we do keep tactical portfolios.
04:49Yeah, we do keep tactical portfolios, but somewhere we believe that,
04:55let the run play through. It's an expensive market right now, and we have no doubts in it.
05:00On a broader, on a large cap basis, if we talk about the Nifty, as per se, it's not that expensive.
05:06We do not believe that there is more than a 10%, 10 to 12% downfall in the worst case scenario for
05:11the Nifty 50. But when it comes to the mid caps and the other sectors that have run up in the last,
05:18say, one and a half to two years, there can be a significant downside in the next three to six
05:23months. So, when this happens, generally, it's okay to keep a tactical portfolio. It's okay to
05:31predict what is going to happen, the next sector that is going to come out. But I believe that we
05:38will find lower levels going forward. Yes, but we'll keep nibbling to them as and when they
05:43correct. You're absolutely right, that inflation is now coming under control. But what we are not
05:49seeing right now is the global growth, especially the China factor is hampering a bit. But yeah,
05:55that is also, we believe, in the very near distant future, the problem should be solved.
06:00It needs just a little bit of more time. You have to complete that
06:04antibiotic course, which China is going through.
06:08Understood. You like FMCG. Talk to us about what within FMCG. Is it more rural facing? Is it QSR?
06:19How would you play this?
06:21So, again, in FMCG also, either somebody who's doing something the way it not has been done
06:27before. Some e-players, I consider them into FMCG, who have changed the way the business was
06:37done. I think QSR for us is a thing of the past. With these new apps coming in, you have a variety
06:43of choices now and you're not dependent on a particular pizza or a burger company. You have
06:48a lot of choices and things in that phase for the Indian economy and the world are changing at a
06:52very, very fast pace. I believe the rural is the way forward. It was due for a very, very long time
06:59and there is value in the rural facing FMCG stocks. So, we are a little bullish on the FMCG.
07:06But that too, again, because we believe that the inherent growth questions of the economy,
07:11the inherent sectors which had to lead this run are now expensive. I think more expensive and
07:19have run up their course in a very short period of time.
07:23Right, Anirudh. And Anirudh, last off, with regard to some of these new age tech companies,
07:29call it a Naica, call it a Paytm, call it a PBFinTech. Today, Naica is obviously up and
07:35away in trade. What's your sense? Do you like any of them? Would you be participating in any of them?
07:42So, I am not a fan of new age companies until and unless I am a regular user in them.
07:50This is something that, or we see something changing in those companies. So, there are a
07:55few companies that we like. Some companies that have become, that have replaced, I would go to
08:02the extent of saying that have replaced the way the business was done. Something that have shaken
08:07up my FMCG basket, that was the same for the last 20-30 years. And last 20 years, it has been the
08:17same and has now been shaken. So yeah, a few companies like Zomato, though it's not a recommendation
08:21to buy and sell, I believe should lead the way forward. They're a little bit expensive, but yes,
08:26that is where the business is being done. And no, I'm not a fan of Naica as such. Yeah.
08:35Though we are diving into the numbers this time and trying to see how they are shaking up things,
08:40how things are being done differently. But yes, everything is becoming fast and
08:46somewhere the way Zepto and Blinkit and all these apps have changed the way
08:55the business was perceived. FMCG is also, I believe, to be perceived differently now.
09:00Okay. Thank you so much, Anirudh. It's been a pleasure chatting,
09:04breaking down some of those views and thoughts.