Santosh Joseph, Founder and Managing Partners at Germinate Investor Services LLP, believes India is into a multi-year bull run with occasional breaks.
“We will grow for many more years, but can’t be like the last 15-18 months,” said the veteran banking, insurance and asset management professional.
He thinks that as the economy recovers, most consumption-led themes would continue to do better with old hands like industrials, engineering and PSUs offering value opportunities.
What is your advise to investors in the current market scenario where enormous wealth has already been created?
While the past year has been phenomenal it’s important not to get carried away. These high returns are not the normal. It’s prudent to trim exposure and limit fresh exposure in buoyant markets. Be prepared, for any opportunities that may emerge, history has taught us they will come again.
The market so far has given more than 40 percent returns from last Diwali. Do you think similar kind of returns by Diwali 2022. What do you think are the driving factors for such returns?
Like I said earlier, a 40 percent range of returns is just too good to continue. Even if it were to continue, it is better to tone down one’s expectations and not be aggressive in exposures. Staying invested and partial profit-booking is always a good idea. Being greedy has never worked. A recovering and renewed economy may still hold up well, but can’t be over stretched.
What are the risks that can spoil the market sentiment, especially when the market is hoping for strong economic growth and corporate earnings?
We all know that the markets have run up due to massive stimulus programmes globally and locally. This will at sometime have to be normalised and the effect of stimulus is inflation.
The return to normal, which is withdrawal of external stimulus support and rise in inflation, seem to be the major factors that control flows into markets and equities in particular, these will eventually have an impact on the markets.
While these may not be so positive in the short term, some bit of inflation and economic activity sustenance beyond stimulus is a good sign of economic recovery and growth in the long run. Earning growth is the biggest hope & expectation for further growth of markets.
Which sectors would you suggest investors to focus on now that can create good amount of wealth in the next couple of years?
Consumer-facing businesses in the areas of entertainment, travel, real estate have already witnessed a swift and sharp move. I think as the economy recovers, most consumption-led themes should continue to do better with old hands like industrials, engineering and PSUs offering value opportunities.
Do you think that we are in a multi-year bull run and multi-year growth story?
Yes, we are in a multi-year bull run, for sure! We have seen many emerging economies in the past go through multi-year bull rallies with minor breaks. India seems to be on that trajectory.
We saw this happen in Japan during the ’80s, a multi-year and multibagger bull run. We will grow for many more years, but can’t be like the last 15-18 months.
Growth will be more subdued and realistic, in line with or better than nominal GDP growth.
What is your reading from the September quarter earnings? What are the top five companies that beat your earning expectations by a wide margin and missed sharply respectively, and are you bullish on those stocks?
The earnings seem very encouraging, most companies have reported robust resumption of business activity and earnings growth. We won’t delve on individual stocks and results but there are many bright spots to pick on.
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