Anurag Singh, Managing Partner, Ansid Capital, says the Indian economy persistently is in such a sweet spot for the next 20 years, that no other country can match it. There is no stopping India demographics for the next 20 years. But markets can price in too much at times and that will have to be just accommodated. There was too much complacency around how the 15% year-on-year CAGR is just almost guaranteed. The latest lessons need to be learnt there.
How do Indian investors read all the global developments because the biggest fear is that money is going to move out to China and that is going to pull out of India. Is that the right thought?
Anurag Singh: There are two broader perspectives here. One is, we have always worried about the FII selling, FII buying, but I have always believed that at any point in time, we should look at our metrics and decide whether we should buy or not. Nobody is forcing DIIs to buy. They should not be buying. I understand the compulsion of not staying so much in cash. But at every point, every investor will have to see what is their threshold of buying and what they are buying for and what is their long-term trajectory.
We cannot blame FIIs because that money is anyways fly by night, that can find ways across the globe and wherever they find cheaper valuation and risk reward perspectives, the money is going to flow there. China this time has made available $100 billion just for the buybacks. The Indian market in the entire year receives a liquidity of around $50 billion. The Indian market is about $5 trillion. The Chinese market is about $9 trillion. So, proportionate to the Chinese market, they have released one year of SIPs together and that is only the government buying.
So, imagine the rally that it can create in the Chinese market. I will just use two quotes. One is by Professor Jeremy Siegel. He says, you cannot go wrong at a PE of nine. I understand it is China, but it is still a capitalist country. It might have a communist government but it was really too cheap. Last week, there was record buying by hedge funds in China. So, I do not think this is stopping in a hurry.
David Tepper famously said, what do you buy in China? Well, everything, he said. And no wonder, he is placed in all these major Chinese stocks. So, this is important, but at the same time, coming back to India, use your own judgment, if the price is not right. I have always been a proponent of the age of secular buying and sitting for 20 years. That is gone because there is so much money chasing the market all the time.
Timing is the only thing which is going to keep you in the exponential path to money making. Secular runs are more or less over. You spoke about liquidity, but this liquidity is going to be wasted in giving exits to the foreign investors, promoters and private equity. That is a bigger reason to worry about and investors need to learn this lesson. There is nothing unusual about it.
What will influence the script of how markets would move? Will it be China? Will it be geopolitics? Will it be this churn from India to China? What will influence the script of financial markets in the near term because suddenly there are a lot of vectors at play?
Anurag Singh: So, one is the US. It looks pretty safe, rates are being cut, the economy is strong, the job market is holding. So in the US, there are no worries, except that the rest of the market has to catch up to these seven magnificent stocks that were there. The US seems pretty safe.
Amongst emerging markets, Mario Draghi last week came out pretty strongly that Europe needs to really do something. He recommended a stimulus of 4% to 5% of GDP in investments. A thought is going around within Europe as well that once we survive this inflation, the stimulus has to come in. In China, the government could not wait any longer. So, overall, the theme globally is that inflation is behind us. People need support. The money easing has to be carried out by central banks and the governments are ready to provide that stimulus support across.
So, with that said, it is a minor blip. The Indian economy persistently is in such a sweet spot for the next 20 years, that there is no other country that can match it. But there is no stopping India demographics for the next 20 years. But that said, markets can price in too much at times and that will have to be just accommodated.
There was too much complacency around how the 15% year-on-year CAGR is just almost guaranteed and I think some lessons need to be learned there.
