We anticipate consumer internet businesses to start listing and unlocking value. Some of the sunrise sectors that we are bullish on are niche plays: for example – waste management, Nitin Shakdher, Professional Investor and Founder & CEO, Green Capital Single Family Office said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) The market is going through some consolidation, but do you think the bigger story is still intact and it is still a good buy on the dips market?
A) We don’t believe in painting stories or narratives but the fact of the matter is that the market liquidity is strong, corporate earnings are recovering and money is there on the sidelines, which means every opportunity to correct will be used as a buy on dips market from here on.
Q) It is well-known fact that the market discounts everything in advance and this it might have discounted a lot. Do you think with growth catching up – the market could not take a breather and let numbers do the talking before resuming its uptrend journey?
A) What tends to happen is that the market might take a breather, correct & consolidate the focus from the broad market shifts to company specifics.
It means identifying sectors and companies that are outperforming on earnings or companies yet are still undervalued and maybe have better days of earnings ahead.
Q) There is a lot of buzz in the financial services space on account of privatization or merger of NBFCs. How should one play the financial space post Budget 2021?
A) Well it’s simple. If you anticipate an economic strong recovery with laggard sectors like power, infra, real estate to catch up: then the economic recovery is more pronounced in PSU Banking stocks as a lead indicator of the Indian economic cycle.
Conversely, private sector banking continues to gain but in acute economic recovery cycles, laggard PSU Banks tend to catch up.
Q) 7 consecutive months of outflows from the equity MF scheme tell a story that investors would like to take things in their own hands especially the ones who can take risks while the risk-averse ones continue to follow the SIP route. What are your views?
A) In a rising bull market cycle, mutual fund investors continue redemptions for either of the two reasons: either booking profits on investments and holding some cash to be deployed or a small rotation from passive mutual fund investing to direct equity investing as that tends to give the alpha in a bull market.
Q) We have seen a lot of digitization taking place in every sector amid the outbreak of COVID last year. Can Internet-based companies, insurers turn out to be the next wealth creators of this decade? What are your views – if not, which sectors are you eyeing?
A) Digitization continues to be a profitable theme. But if you look at the innovation in the Indian tech markets: the quality of companies that come to the market in are in traditional outsourcing/software IT solutions.
We expect this to change and anticipate consumer internet business to start listing and unlocking value. Some of the sunrise sectors that we are bullish on are niche plays: for example – waste management.
Q) The year 2020 saw many good ticket IPOs and the story for the primary market still remains strong in 2021. Can we call it a frenzy amid the abundant liquidity in the system? It looks like whatever you throw at D-Street everything will get absorbed. What is the kind of money your see getting raised in 2021?
A) Year 2020: was just a trailer as to the kind of money that can be raised if you have good companies, stable managements coming to the market with niche business models.
In the year 2021, we could see a lot more rotation of new companies in the consumer internet space that try to raise funds in large listings that everyone wants to get in on.
Q) In the market it is always about the future. In 2021 – the big theme that has emerged is Bitcoins. Yes, they are expensive but many investors who can afford them have bought them. Should investors seriously consider crypto as an additional asset class? How should one plan a portfolio for a post-COVID environment?
A) Yes, crypto as an asset class has given good gains. But in the Indian context, we still need to remember that the government & RBI has not yet given legal status to this asset class. So it is a fine line. Probably a wait & watch approach and see the developments on this space.
Traditional assets like equity will still hold a larger portfolio allocation. Interestingly, we think some alternative asset classes like wine, art might show better traction in 2021 and could be the space to look out for.
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