Naveen Kulkarni, Chief Investment Officer, Axis Securities, said that the IPO market is seeing a degree of exuberance which is exciting but also making the old-time investment community nervous also.
Kulkarni has more than 15 years of experience in the financial services industry and specialises in fixed income markets, intermediation, origination and distribution. Before joining Axis Securities, he served as the co-head of research at PhillipCapital India Private Limited.
In an interview with Moneycontrol’s Kshitij Anand, Kulkarni says that the nervousness among the old-time investment community is on account of a wide range of business models listing at valuations never seen before — IPO market is in a frenzy mode making it difficult to assess. Edited excerpts:
Q Indian market might be off from highs but benchmark indices are getting plenty of support at lower levels, and more than 300-400 stocks are hitting fresh 52-week highs almost on a daily basis which suggests that the momentum is intact. Time to move to specific rather than focusing on Sensex/Nifty?
A) The Indian equity is now hitting new highs with the front line stocks like Bharti Airtel, ICICI Bank, SBI gathering momentum. Over the last four months, the large-cap stocks have underperformed the mid and small caps.
So, as theme rotation, there is room for upside in largecap stocks which can do well in the short term. Overall, the trends remain constructive for the broader market and markets will continue to generate returns.
Q) The latest US Fed statement highlighted that a number of FOMC members argued that the tapering should start with knocking off the USD 40 bn monthly purchase of MBS. How will it impact Indian markets?
A) Tapering in the past has had a significant impact on not just Indian equity markets but on global equity markets also. However, it is difficult to calibrate at the current juncture the quantum of the impact of tapering.
Nonetheless, it can be assumed that tapering will have a significant impact on the equity markets.
Q) The big China crackdown on ed-tech companies triggered jitters in equity markets across the globe last week. Do you think there is a silver lining for India or Indian firms in listed or unlisted space
A) China has a very large tech industry which is many times the size of the Indian market. So, the comparison is not fair.
India has its own evolving tech industry which is seeing significant interest from a wide variety of investors across the spectrum. Thus, the impact on China and gains in India are not much correlated to say the least.
Q) Plethora of IPOs will be listing in July and the second half of 2021 – what do you make of the IPO frenzy on D-Street? How should investors evaluate IPOs ahead of investing?
A) The IPO market is seeing a degree of exuberance which is exciting but also making the old-time investment community nervous also. The excitement is on account of new business models getting public money and becoming stronger.
The nervousness is on account of a wide range of business models listing at valuations never seen before. So, the IPO market is in a frenzy mode making it difficult to assess.
Q) What do you make of the June quarter results so far which have come? And, your estimates for the FY22, and FY23?
A) The Q1FY22 results have been a mixed bag with good results from the IT and Cement sector while it has been a mixed bag for other sectors like Pharma.
The BFSI sector also has reported mixed trends with the sector bellwether HDFC bank delivering sluggish growth while ICICI delivering strong growth. The auto sector continues to see raw material pressures with Maruti reporting weaker margins.
Thus, the results trend has been mixed but we do not see major challenges at this juncture to be very worried about the earnings trend for the year.
Q) As we enter August – ‘Independence Day’ is something which we all look up to. How can one become financially independent by the age of 40 in case he starts planning by 25.
A) Equities present the best possible wealth creation option for everybody. Systematic investment plans with a significant allocation to equities will help in creating solid wealth in the long-term.
Q) What is your mantra of long term investment? Any principles or guidelines which you stick with when investing?
A) Long-term mantra is very simple. India is a country where quality delivers the best returns over the long-term. Invest in quality stocks for the long term and this will result in good long-term wealth.
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