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in an interview with ETMarketsChanda, who has over 18 years of experience in the BFSI sector, said: “I think the banking sector will be the dark horse for this year. We have seen that the sector has accelerated due to the impacts of COVID and its aftermath,” edited excerpts
As we move into the second half of 2022 — what are your expectations from the markets? Do you think 2H2022 will be better than 1H2022 because of most of the negative factors?
I agree that most of the negative factors are covered. While the threat of recession still looms large in the US, there is no end to the Russia-Ukraine conflict, oil is beyond our comfort zone, Rupee With new lows being made almost every day, the impact of the rate hike on inflation levels and its impact on growth remains to be seen.
With these in mind, I would say that post 2H2022 June quarter results will be subdued with some action expected towards the end of the year, when markets start factoring in FY23 figures.
However, one thing is certain that volatility will remain and now is the time to plan our investments around it.
Gravity seems to be pushing the rupee to new record lows. How will this affect foreign investment and FII inflows?
As I said earlier, Rupee is hitting new lows almost every day. Although the central bank is intervening, it is not talking about maintaining it at a certain level, it is acting to ensure low volatility.
I think as our current account deficit (CAD) widens, it will go down further. The outflows we are seeing from FIIs and FPIs were expected.
As a matter of fact, they are selling in markets with higher CAD where the currency can depreciate further. with America irrigated As rates rise, US Treasury yields have increased. The flight was expected to safety.
This trend will continue for some more time as the Fed is not done with increasing rates. This will further strengthen the rupee. Having said that, from a medium to long term perspective, we are in an investment position.
When there is some semblance of normalcy at the global level, we will be in a better position than other economies.
With decades of experience under your belt – what are your 5 rules when choosing a stock?
I’ll share my 5 rules for investing, which is something I’ve built into Jarvis as well.
1. Know your risk appetite. Know how many hits you can take without losing sleep.
2. Take emotion out of the investment decision-making process. That’s why our mantra has been “love the money, not the stock”
3. Stick to your asset allocation. Every investor is different. Asset allocation will also vary. Know what suits you best.
4. Proactive management is the key to getting the most out of your investments. However, this has to be done keeping in mind the cost and tax implications. Long term investing is the key to wealth creation, but be persistent in looking for opportunities.
5. Never use leverage to invest.
Indian market has been more resilient than US markets or other EMs over the last 6 months – what does this tell you – strong macro or strong DII? Which is the more prominent factor?
The DII has provided much-needed support to markets preventing free-falls. However, as I mentioned earlier, we are in a better position than most other economies.
Our inflation level, our growth expectations, capacity utilisation, local demand, everything is better than others. While uncertainties dominate our economy in the short term, from a medium to long term perspective, buy “India”.
We are seeing many memes saying that “my FD is giving more returns than stocks”. With rising interest rates and global tensions – how should investors structure their asset allocation?
We have witnessed many life changing events in the last two decades; Something very recent. We came out of it, we moved on. The people who were able to earn money consistently, were supposed to have a disciplined approach to investing.
He didn’t let his emotions dominate his decision-making process. As I said earlier, take the emotion out of investment decisions and you will make money.
An investor’s asset allocation should depend on his risk profile which is again a factor of many variables. One cannot have a “one size fits all” allotment process.
In my opinion, equities as an asset class will yield good returns in the long run. However, this does not mean that one goes and invests everything in equities.
One should talk to his advisor, go deep into his financial situation and then come to an informed decision on where to invest his money and how to diversify it across asset classes.
Which sectors will be in the limelight in 2H2022?
With the rupee depreciating, IT and pharma may see windfall gains in the near future.
Any sector that can become the dark horse of 2022 and why?
I think the banking sector will prove to be a dark horse for this year. We have seen that the sector has gained momentum due to the impact of COVID and its aftermath.
However, as the economy recovers, we will see better performance based on improved business growth and asset quality. It will be helped by the festive season itself in the next few months.
While rates are being hiked, I do not think it will have any significant impact on credit offtake as demand is expected to pick up. We have already seen a rise in demand in the real estate sector.
For risk-averse investors – do dividend-paying stocks make more sense? Or they can look at MNCs listed in India. Any thematic topic that now seems more attractive among global factors?
To me, risk-averse and equity investing are conflicting words. As a matter of fact, I just re-added the risk profile on my system and took out the “risk-averse” profile.
If you are a risk averse investor, now is not the time to experiment with the markets.
If you want to fulfill your urge to invest, then go the SIP route and make different investments over the next 9-12 months with an investment horizon of at least 3-4 years. With such an investment horizon, consider diversifying the market cap.
Is Nifty50 trading at a fair valuation after the recent fall? Or is there room for further decline? How is business in relation to global competitors?
Nifty 50 has improved around 9% YTD and is now at a fair valuation as compared to its global peers.
The bulk of FIIs and FPIs have already left. These are good levels to enter, albeit in a staggered manner. As I said earlier, volatility is going to be the new normal for some more time. Look to ride the wave.
How do you view the IPO market in 2H2022 after the recent IPO which fails to please the retail investors?
It won’t be quite as enthusiastic as we saw last year, where almost every issue was listed with a premium.
We will see a slow response this year to IPOs where investors will actually analyze and buy companies with strong balance sheets, good order books and good management. We can expect the enthusiasm to return by the second quarter of FY13.
With 10.8 crore registered investors on BSE – what is your advice on how to navigate the rest of the year 2022 or FY23?
Here we recommend-
1. Stick to Your Asset Allocation
2. Control your emotions and you will find opportunities in this market too
3. Stagger your investments in equities and ride the wave of volatility.
This advice is good for all market conditions.
For FY13, before you start factoring in FY23 prices, let’s wait for June quarter results to get a better picture.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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