What is your positioning right now? What percentages of your portfolio are you short and long in?
Before giving you the current position, let me give you a little perspective on how we changed our position which were pretty negative earlier to something which we are now currently positive about. Post the corporate tax cut, we changed our position from highly hedged to low hedged. By moving down pretty much on the hedged, we want to capture the market move of the extremely positive steps that the government has taken.
At this point in time, we are bullish yet and we think that in spite of some amount of consolidation or some amount of short-term correction, we are pretty much bullish on the medium-term perspective from here on.
Assuming that you are net long on the market right now, what are the big overweights? Apart from Nifty, are you long in Bank Nifty as well?
We have always been speaking about our preference for private banks and those banks which are adequately capitalised with impeccable risk management, a strong management bandwidth and the ability to raise capital. We are very bullish on the whole financial space. They are in a sweet spot to grab all the market share which is left by the weaker players in those segments. So, we have an overweight on financials.
Two, we are also positive on consumers – -both staples and discretionary. Those staples valuations are a little rich on a relative basis, but we are still positive on the whole consumer story. Last one year or one-and-a-half years of dull consumer demand does not take away the excellent demographics India has. It is just a matter of time before the pent-up demand in the system comes back and we are bullish on consumers — both staples and discretionary — including autos. Those are the sectors we are positive on and some amount of industrials also form part of the portfolio.
How are you positioned on the broader markets? Benchmarks have come back but broader markets are yet to catch up. When do you expect it to happen?
It is interesting. The last 7 to 10 days have been better for the broader markets right and after this huge underperformance by the broader market, there is some merit to them performing better in the shorter term.
Having said that, our broader thesis still remains that the strong guys are going to get stronger and we would probably stick to largecap stocks unless and until we see much broader economic growth. A GDP print of above 5-5.5% or 6% does not gives us huge amount of confidence to invest in the broader markets. Yes, of course, there can be shorter-term rebound, but we will stick to quality, we will stick to largecaps which are pretty much consistent.
How have the flows been to your scheme? Do you see appetite returning among your clients?, Are they doing top ups or are you having meetings with new clients?
What we are seeing is basically that the clients want to have those kind of products which suit or which gets adjusted to their product profile and helps achieve their financial goals. Investors are looking for risk adjusted return products and that is why we are getting some sizable kind of interest from the broader clients. We had our first fund in terms of further subscriptions because we had reached the maximum level of investors into our AIFs. Having said that, for a shorter period of time now, we have opened it and we are looking at a very good incremental interest coming into both our products both on an absolute return and enhance return.
How do you see this PSU bank pack — the larger ones as well as the small finance part of the financial space?
Among the PSU banks, the larger ones are the ones where the PCA restrictions are not there. If we see some amount of NCLT resolution coming through in the short to medium term, then they definitely can have a positive leg-up in terms of price performance. Having said that, I would not pick them as long-term investment bets. These are more short-term bets.
For longer-term investment, we want to be in those banks which have the consistent ability to grab market share. We have impeccable risk management systems and a management bandwidth and an ability to raise capital which I just mentioned a while back. We would probably concentrate on them. I am not saying that the PSU banks are bad, but it is just a relative opportunity for us and so that is how we would look at them.
In terms of the small finance banks, we are excited about the space and we are closely looking at the investment opportunities coming out from there.
What is your position on autos. Do you like it or is it on your avoid list?
We like autos and we think that post the fantastic monsoons, the rabi crop might be much better and the rural inflation might come up purely because of food prices would be a positive disposable factor, giving income into the hands of the rural population.
We do believe that the pent-up demand in the system may start showing up with the two-wheelers first and then probably flow into the four-wheelers as well. Having said that, we are not very bullish on the CV and the tractor side at this point in time. We are concentrating more on the two-wheelers followed by four-wheelers.