Atul Suri, CEO of Marathon Trends – Portfolio Management Services, seems upbeat about the Indian market: “I remain very very bullish on India. I think we will not only just touch new highs, we’ll stretch it higher. I think we’re in a full-blown bull market which is not really visible because of so much noise.”
In an interview with CNBC-TV18 on September 19, he elaborates on why he feels Indian markets will enter a bullish phase . Edited excerpts.
The last time you were here you were saying risk-reward ratio remains very positive and the markets have come back very strongly and very nicely. What is your thought process on this?
When I look at the markets, there are two worlds: There’s India and the rest of the world. If you look at India, you cannot but be bullish — it’s an awesome-looking market out here. When I look at Indian markets I feel we are starting a bull market and as I said the internals are giving me confidence and they stand out.
However, in the long term when you flip it to the global side, there are worries. Every morning you get up and the interesting part is the world swings between inflation and recession depending on whom you hear. If you hear the US Fed and the economist it’s all about inflation and if you hear corporate US, they’re all talking about recession. The fact is that even out there, there is so much bad news and that at some point I’m going to feel pressure so barring that if there’s no collapse as such in global markets I think we are in for a fantastic run.
I remain very very bullish on India. I think we will not only just touch new highs, we’ll stretch it higher. I think we’re in a full-blown bull market which is not really visible because of so much noise.
The sector of the moment is defence once again. It’s just remarkable the way the stocks have been piling on gains. Have you tracked this space ?
It’s overweight in my portfolio. In the internals you find capital goods, infrastructure bearings, defence, auto — a lot of these sectors have not done well for a decade; these are sectors which move when they move; it’s not just a one-week or one-month high; they indicate a cycle that’s changing and I feel that if I look at the markets the industrial cycle is turning and this is something we know which we last saw in 2003-2004 and we know what happened.
I’m fully aware of what’s there in the global scene. I’m fully aware of global macros, that is why I really can’t go out and give you a very stretched target but there are a lot of pockets of strength. If we look at the way the mid cap is performing; we know the mid cap was a small cap — the interesting part is the mid cap actually has been the largest outperformer in the space which really tells you it’s about quality; it’s about the migration of a lot of these stocks from mid to large cap which is really happening. Small cap very often is froth.
Who do you think the leaders will be. We’ve seen banks perform, but do you think it’s become a bit of a crowded trade and will the leadership change?
No, in fact banks have underperformed for two years but if you look at the market from the bottom we are up 14-15 percent. Look at something like PSU banking: It’s up 30-35 percent but if you look at the bigger picture on a 10-year basis and what PSU banks have done, if you take out SBI from the equation, then everything else is pretty disastrous. And that’s what makes me think this is not a market that’s defensively poised — it’s a market that is poised for growth and that is really what makes me bullish.
It seems like there’s a massive rally in the broader market so are there bubble territories?
There will always be some people there who have to find their daily wages but really you will not find that kind of broadness there. As I said, the news is bad but I’m not talking about today or tomorrow. I’m talking about a few months down the line. This is a great buy on dips market. And no one knows what is going to happen in the globe. What I see is specific to India; what I invest is in India. You have to remember that the last stop was 10-11 months ago, we are not in a runaway bull market, there is no bubble, there’s no froth, markets have corrected 15-20 percent globally.
Given S&P is already down 18-19 percent for the year, and the market here is higher in rupee terms, is there a catch-up which is necessary ? Do you think it’s possible we go through the next year and a half like this huge with a 20 percentage point difference in terms of returns and then the US does its thing and comes back and then there’s a global upside?
I feel that for a decade thanks to liquidity flows we saw unanimous bull markets globally. However, as liquidity is getting tight, things are going to be more qualitative — it’s like when you have limited money you have to choose a stock. Now money is limited, you’ll have to choose the country so markets are going to be a lot more country-specific, sector-specific, stock-specific.
It is not going to be what we experienced in the last decade. The decade of ETFs (exchange traded funds) outperformance is over; we are going to be back to active managers because active management is about selection. The globe has also shrunk because what happened was there was so much money you never had that kind of time to go out and differentiate — you went and put it into baskets and those baskets are represented by ETFs. Investors are going to be a lot more selective and that is how India stands out and that’s what I like about it. If you look at it from the board June lows, India is the best performing market on the pull-up.
