If you look at the market, if you look at Nifty itself, we have managed to fill in all the gaps. In fact, the Nifty is up almost 10% in the last month. Look at the macros that are playing out. Today we saw Brent crude falling below the $60 per barrel mark. The dollar index is still sub-100 levels and the FIIs have turned net buyers as far as the Indian market is concerned. Do you see this up move in Indian markets likely to sustain?
Sushant Bhansali: We are in an interesting time and it’s very difficult to foresee how things will play out in the full year because there is so much global uncertainty and to that domestic geopolitical situation which might happen anytime as well. So, there are too many ups and downs. But if you look at and take a more long-term view of three-year plus, then you will see India as a great opportunity.
The global economy is just not growing and India even after a small downgrade is still 6% and from that perspective, there is growth in the market. So, we will continue to rise. The equity flows within the domestic community of investors has been rising every passing year for the last many decades and we are still underpenetrated as a country. From that perspective, if flows continue to come in and we are now not necessarily only dependent on global flows to take our market to new highs. From that perspective, from a long-term perspective, India will continue to shine for investors both domestic as well as global.
We have seen a bit of global investors coming back into Indian markets. Probably, the valuation correction which happened in February and January was a good entry point for the global investors and despite what happened globally to tariffs, there was a big comeback for global investors in India.
India will continue to shine in the long term is what you say. But are there any risks that you would like to highlight at this point in time and also any pockets of the market that you think one should avoid at this point?
Sushant Bhansali: If we look at dollar index and USD in particular has been depreciating and that becomes a big uncertainty for exporters which were anyway from a tariffs perspective already living in a big uncertainty and combine that with rupee appreciation against dollar, it is giving from the earning side quite a bit of uncertainty for the next couple of quarters.
So, anything related to export, especially dolla- related is something one should stay away from for the time being. At the same time, this uncertainty might provide some good entry points for long periods of time. So, one should be open to opportunities in good quality companies which have historically given good earning growth every year, every quarter and those are the times to invest into those companies.
Now, from the domestic perspective, rural has been recovering quite well and that is why we have been quite gung ho on domestic consumption and rural play sectors – be it FMCG or BFSI – which are entirely domestic driven. Affordable housing is making a comeback and those are the sectors we prefer.
You mentioned a couple of sectors there, but I want to ask you about Nifty Bank because up until now, banks have been providing a good cushion to the markets and have been outperforming. We see a bit of consolidation and correction coming in banks. Going ahead in the next leg of the rally, do you see banks taking a back seat?
Sushant Bhansali: If you look at Nifty and probably other large indices, banks will continue to a large part of the growth for the fiscal year in which we are and thereby not see banks losing the momentum in terms of valuation, probably the upside is not that great as it has been for the past few months. But it was a slam dunk investment a year back when nobody was paying attention to them and a large part of the juice is probably already inside the crisis but with earning growth momentum, particularly private sector banks coming in, there are many opportunities going ahead.