- Distributes approx 3.2 million metric standard cubic meter per day (mmscmd) of natural gas through pipeline networkd of 3980km.
- CNG distributed to 3.67 lakh industrial, commercial and domestic consumers through pipeline network.
- 3.2 Times growth in turnover in past 7 years.
- 2.8 Times growth in profit in last 7 years.
- BG group which owns 65% of company is likely to offload its majority stake to GSPC distribution network for Rs.2460 Cr.
Monday, February 11, 2013
Gujarat Gas Company
NHPC :
- Started in 1975
- Reported BEST EVER results in FY 2012
- Owns 12 power stations – generating 18683 MU of power per annum
- Since FY 2003, power generation has jumped 2 times
- Presently constructing 9 Hydro Electric projects with installed capacity of 4271 MW
Jagran Prakashan
- Media and communication company – Newspapers, outdoor, internet and magazines
- Owns 12 Publishing Titles – includes 8 Newspapers in 4 Indian languages apart from English
- Dainik Jagran Newspaper – largest read daily in the world – 37 editions in 11 states
- Midday Newspaper – Gujarathi and English
- Sakhi – Women’s Magazine
- Inquilab – Urudu Newspaper
- City Plus – Weekly English Tabloid.
- Aquired “Nai Dunia” – Hindi daily paper for Rs.220 crores in FY 2013
- 2.82 times increase in turnover in last 7 years
- 5.63 times increase in profit in last 7 years
- Dividend Yield of 3.2% (175% of Rs.2)
Deepak Fertilizers and Petrochem Corp
- Started in 1979
- World’s largest manufacturer of Technical Ammonium nitrate (Tan)
- Commands 30% market share in TAN, 70% in Iso-Propyl Alcohol and 40% Nitric Acid
- Turnover – up 4 times in last 7 years
- Profit – up 2.75 times in last 7 years
- Debt equity ratio of 0.73 end FY 2012
Asian Paints
- India’s largest paint company specialized as Decorative paint manufacturer.
- Asia’s 3rd largest paint company
- Operates in 17 countries with 24 manufacturiting facilities across the world.
- Debt equity ratio of 0.20 times over last 10 years
Wednesday, January 23, 2013
Indian Economy on Recovery Mode, but ...
IDFC Mutual Fund expects Indian companies to show a lot more financial discipline during the fourth quarter of the current fiscal year. Banks have already written off some of their bad loans and local companies will sell non-core assets to cut debt, Kenneth Andrade, chief investment officer, IDFC Mutual Fund, tells ET's Apurv Gupta.
However, the CIO, who manages Rs25,000 crore of investor funds and is known for his acumen in stock-picking, raises concerns on political uncertainty ahead of '14 elections as a fractured majority could adversely deteriorate economic environment for a while. Edited excerpts:
How do you see the year panning out against the backdrop of 2012, which was a turbulent year?
There has been a large economic expansion in the country in the past seven years. The first leg was led by the expansion from corporate and the second leg in the last three years was led by the growth in a consumer-led economy. We have been maintaining that Corporate India will see its last leg of balance-sheet growth or the increase in balance sheet into 2013 March end. Post this, you will see companies having a lot more financial discipline. Banks have already taken write-offs and corporates will deleverage and sell non-core assets. This is similar to 2000. We have come a full circle and are seeing a rewind. This could be the beginning of a new cycle.
Do you think that there is lot of nervousness on the political climate and policy deadlock which is scaring away investors?
Ahead of the elections in 2014 it is not surprising that the environment is uncertain. There is no political consensus and a fractured majority could adversely deteriorate the current environment for some time. But the latest round of events on FDI and attempts to lower subsidy are all in the right direction. As long as the longer term direction is to move to a market-driven economy with some level of subsidization, as a country we should pull it through as the economy tiers upwards in growth. Earnings growth, which is a rarity across the world, is something of a given in the Indian economy which has gotten investors' attention worldwide.
How are you positioning your portfolio in that case?
We are expecting this year to be a reasonably stable. There does not seem to be any one large macro event outside or internally which will disrupt the entire environment. So, the focus will be back on to earnings growth and the deleveraging of corporate and the economy. We will expand this part of our holding given the fact that cash flows will materialise on the system, balance sheets will stop growing and you would have some part of a capacity actually getting utilised.
So do you think that a large number of infrastructure projects stuck for want of funds and approvals taking-off this year?
We feel that infrastructure will be a stable sector from here onwards. There are several reasons for this. First, there was this execution issue. Many people said that Indian companies will not be able to execute large projects. However, that was resolved as many companies showed their competence on that front. The second issue is fuel supply. The supply is available but the issue is to negotiate and resolve. The third factor is that the price cannot be passed on to the end consumer. However, that, too, will see a resolution in the next two-three years. While this was not the case so far, states have now started passing on the cost to the consumer. So, most of the projects that were unviable as the cost could not be passed on to the consumer will become feasible.
What segment or space are you particularly bullish on?
We are positive on public sector companies, especially, from bank and power sectors. Most of our funds are drawing down their exposure to FMCG and pharma space due to stretched valuations. Most of these PSUs have survived many cycles and proved that they are as efficient as any other private sector company. They have several natural advantages in terms of their reach and distribution. Most of the PSUs have huge cash reserves and are not leveraged. Most of them are available at attractive valuations. For instance, companies in the utility sector like power and gas have been expanding their capacities in the past few years. The balance sheets are strong. All this while the stock is trading at historical low valuations despite many of these companies enjoying a sort of monopoly status in their segments. We believe it's a compelling place to be in. In case of PSU banks, the most talked about issues like NPAs, will be resolved in the next 2-3 years.
Apart from political uncertainty, there are macro-economic concerns like ballooning fiscal deficit. Do you think that will keep the investors on the edge?
The key risk continues to be the uncontrolled fiscal deficit to which there is still no answer. The recent events have changed that sentiment quite significantly. It is left to be seen if the same can be implemented in the spirit in which it was announced. A lot of this pessimissim is captured in the valuations of the market. Valuations are comfortable, corporates look like they will recalibrate their balance sheets towards a low debt: equity structure and this will make investing in corporate equity more attractive. So while at a macro level there are significant unanswered questions, at the micro level corporate business models are beginning to look attractive.
However, the CIO, who manages Rs25,000 crore of investor funds and is known for his acumen in stock-picking, raises concerns on political uncertainty ahead of '14 elections as a fractured majority could adversely deteriorate economic environment for a while. Edited excerpts:
How do you see the year panning out against the backdrop of 2012, which was a turbulent year?
There has been a large economic expansion in the country in the past seven years. The first leg was led by the expansion from corporate and the second leg in the last three years was led by the growth in a consumer-led economy. We have been maintaining that Corporate India will see its last leg of balance-sheet growth or the increase in balance sheet into 2013 March end. Post this, you will see companies having a lot more financial discipline. Banks have already taken write-offs and corporates will deleverage and sell non-core assets. This is similar to 2000. We have come a full circle and are seeing a rewind. This could be the beginning of a new cycle.
Do you think that there is lot of nervousness on the political climate and policy deadlock which is scaring away investors?
Ahead of the elections in 2014 it is not surprising that the environment is uncertain. There is no political consensus and a fractured majority could adversely deteriorate the current environment for some time. But the latest round of events on FDI and attempts to lower subsidy are all in the right direction. As long as the longer term direction is to move to a market-driven economy with some level of subsidization, as a country we should pull it through as the economy tiers upwards in growth. Earnings growth, which is a rarity across the world, is something of a given in the Indian economy which has gotten investors' attention worldwide.
How are you positioning your portfolio in that case?
We are expecting this year to be a reasonably stable. There does not seem to be any one large macro event outside or internally which will disrupt the entire environment. So, the focus will be back on to earnings growth and the deleveraging of corporate and the economy. We will expand this part of our holding given the fact that cash flows will materialise on the system, balance sheets will stop growing and you would have some part of a capacity actually getting utilised.
So do you think that a large number of infrastructure projects stuck for want of funds and approvals taking-off this year?
We feel that infrastructure will be a stable sector from here onwards. There are several reasons for this. First, there was this execution issue. Many people said that Indian companies will not be able to execute large projects. However, that was resolved as many companies showed their competence on that front. The second issue is fuel supply. The supply is available but the issue is to negotiate and resolve. The third factor is that the price cannot be passed on to the end consumer. However, that, too, will see a resolution in the next two-three years. While this was not the case so far, states have now started passing on the cost to the consumer. So, most of the projects that were unviable as the cost could not be passed on to the consumer will become feasible.
What segment or space are you particularly bullish on?
We are positive on public sector companies, especially, from bank and power sectors. Most of our funds are drawing down their exposure to FMCG and pharma space due to stretched valuations. Most of these PSUs have survived many cycles and proved that they are as efficient as any other private sector company. They have several natural advantages in terms of their reach and distribution. Most of the PSUs have huge cash reserves and are not leveraged. Most of them are available at attractive valuations. For instance, companies in the utility sector like power and gas have been expanding their capacities in the past few years. The balance sheets are strong. All this while the stock is trading at historical low valuations despite many of these companies enjoying a sort of monopoly status in their segments. We believe it's a compelling place to be in. In case of PSU banks, the most talked about issues like NPAs, will be resolved in the next 2-3 years.
Apart from political uncertainty, there are macro-economic concerns like ballooning fiscal deficit. Do you think that will keep the investors on the edge?
The key risk continues to be the uncontrolled fiscal deficit to which there is still no answer. The recent events have changed that sentiment quite significantly. It is left to be seen if the same can be implemented in the spirit in which it was announced. A lot of this pessimissim is captured in the valuations of the market. Valuations are comfortable, corporates look like they will recalibrate their balance sheets towards a low debt: equity structure and this will make investing in corporate equity more attractive. So while at a macro level there are significant unanswered questions, at the micro level corporate business models are beginning to look attractive.
Indian Economy on Recovery Mode, but ...
IDFC Mutual Fund expects Indian companies to show a lot more financial discipline during the fourth quarter of the current fiscal year. Banks have already written off some of their bad loans and local companies will sell non-core assets to cut debt, Kenneth Andrade, chief investment officer, IDFC Mutual Fund, tells ET's Apurv Gupta.
However, the CIO, who manages Rs25,000 crore of investor funds and is known for his acumen in stock-picking, raises concerns on political uncertainty ahead of '14 elections as a fractured majority could adversely deteriorate economic environment for a while. Edited excerpts:
How do you see the year panning out against the backdrop of 2012, which was a turbulent year?
There has been a large economic expansion in the country in the past seven years. The first leg was led by the expansion from corporate and the second leg in the last three years was led by the growth in a consumer-led economy. We have been maintaining that Corporate India will see its last leg of balance-sheet growth or the increase in balance sheet into 2013 March end. Post this, you will see companies having a lot more financial discipline. Banks have already taken write-offs and corporates will deleverage and sell non-core assets. This is similar to 2000. We have come a full circle and are seeing a rewind. This could be the beginning of a new cycle.
Do you think that there is lot of nervousness on the political climate and policy deadlock which is scaring away investors?
Ahead of the elections in 2014 it is not surprising that the environment is uncertain. There is no political consensus and a fractured majority could adversely deteriorate the current environment for some time. But the latest round of events on FDI and attempts to lower subsidy are all in the right direction. As long as the longer term direction is to move to a market-driven economy with some level of subsidization, as a country we should pull it through as the economy tiers upwards in growth. Earnings growth, which is a rarity across the world, is something of a given in the Indian economy which has gotten investors' attention worldwide.
How are you positioning your portfolio in that case?
We are expecting this year to be a reasonably stable. There does not seem to be any one large macro event outside or internally which will disrupt the entire environment. So, the focus will be back on to earnings growth and the deleveraging of corporate and the economy. We will expand this part of our holding given the fact that cash flows will materialise on the system, balance sheets will stop growing and you would have some part of a capacity actually getting utilised.
So do you think that a large number of infrastructure projects stuck for want of funds and approvals taking-off this year?
We feel that infrastructure will be a stable sector from here onwards. There are several reasons for this. First, there was this execution issue. Many people said that Indian companies will not be able to execute large projects. However, that was resolved as many companies showed their competence on that front. The second issue is fuel supply. The supply is available but the issue is to negotiate and resolve. The third factor is that the price cannot be passed on to the end consumer. However, that, too, will see a resolution in the next two-three years. While this was not the case so far, states have now started passing on the cost to the consumer. So, most of the projects that were unviable as the cost could not be passed on to the consumer will become feasible.
What segment or space are you particularly bullish on?
We are positive on public sector companies, especially, from bank and power sectors. Most of our funds are drawing down their exposure to FMCG and pharma space due to stretched valuations. Most of these PSUs have survived many cycles and proved that they are as efficient as any other private sector company. They have several natural advantages in terms of their reach and distribution. Most of the PSUs have huge cash reserves and are not leveraged. Most of them are available at attractive valuations. For instance, companies in the utility sector like power and gas have been expanding their capacities in the past few years. The balance sheets are strong. All this while the stock is trading at historical low valuations despite many of these companies enjoying a sort of monopoly status in their segments. We believe it's a compelling place to be in. In case of PSU banks, the most talked about issues like NPAs, will be resolved in the next 2-3 years.
Apart from political uncertainty, there are macro-economic concerns like ballooning fiscal deficit. Do you think that will keep the investors on the edge?
The key risk continues to be the uncontrolled fiscal deficit to which there is still no answer. The recent events have changed that sentiment quite significantly. It is left to be seen if the same can be implemented in the spirit in which it was announced. A lot of this pessimissim is captured in the valuations of the market. Valuations are comfortable, corporates look like they will recalibrate their balance sheets towards a low debt: equity structure and this will make investing in corporate equity more attractive. So while at a macro level there are significant unanswered questions, at the micro level corporate business models are beginning to look attractive.
However, the CIO, who manages Rs25,000 crore of investor funds and is known for his acumen in stock-picking, raises concerns on political uncertainty ahead of '14 elections as a fractured majority could adversely deteriorate economic environment for a while. Edited excerpts:
How do you see the year panning out against the backdrop of 2012, which was a turbulent year?
There has been a large economic expansion in the country in the past seven years. The first leg was led by the expansion from corporate and the second leg in the last three years was led by the growth in a consumer-led economy. We have been maintaining that Corporate India will see its last leg of balance-sheet growth or the increase in balance sheet into 2013 March end. Post this, you will see companies having a lot more financial discipline. Banks have already taken write-offs and corporates will deleverage and sell non-core assets. This is similar to 2000. We have come a full circle and are seeing a rewind. This could be the beginning of a new cycle.
Do you think that there is lot of nervousness on the political climate and policy deadlock which is scaring away investors?
Ahead of the elections in 2014 it is not surprising that the environment is uncertain. There is no political consensus and a fractured majority could adversely deteriorate the current environment for some time. But the latest round of events on FDI and attempts to lower subsidy are all in the right direction. As long as the longer term direction is to move to a market-driven economy with some level of subsidization, as a country we should pull it through as the economy tiers upwards in growth. Earnings growth, which is a rarity across the world, is something of a given in the Indian economy which has gotten investors' attention worldwide.
How are you positioning your portfolio in that case?
We are expecting this year to be a reasonably stable. There does not seem to be any one large macro event outside or internally which will disrupt the entire environment. So, the focus will be back on to earnings growth and the deleveraging of corporate and the economy. We will expand this part of our holding given the fact that cash flows will materialise on the system, balance sheets will stop growing and you would have some part of a capacity actually getting utilised.
So do you think that a large number of infrastructure projects stuck for want of funds and approvals taking-off this year?
We feel that infrastructure will be a stable sector from here onwards. There are several reasons for this. First, there was this execution issue. Many people said that Indian companies will not be able to execute large projects. However, that was resolved as many companies showed their competence on that front. The second issue is fuel supply. The supply is available but the issue is to negotiate and resolve. The third factor is that the price cannot be passed on to the end consumer. However, that, too, will see a resolution in the next two-three years. While this was not the case so far, states have now started passing on the cost to the consumer. So, most of the projects that were unviable as the cost could not be passed on to the consumer will become feasible.
What segment or space are you particularly bullish on?
We are positive on public sector companies, especially, from bank and power sectors. Most of our funds are drawing down their exposure to FMCG and pharma space due to stretched valuations. Most of these PSUs have survived many cycles and proved that they are as efficient as any other private sector company. They have several natural advantages in terms of their reach and distribution. Most of the PSUs have huge cash reserves and are not leveraged. Most of them are available at attractive valuations. For instance, companies in the utility sector like power and gas have been expanding their capacities in the past few years. The balance sheets are strong. All this while the stock is trading at historical low valuations despite many of these companies enjoying a sort of monopoly status in their segments. We believe it's a compelling place to be in. In case of PSU banks, the most talked about issues like NPAs, will be resolved in the next 2-3 years.
Apart from political uncertainty, there are macro-economic concerns like ballooning fiscal deficit. Do you think that will keep the investors on the edge?
The key risk continues to be the uncontrolled fiscal deficit to which there is still no answer. The recent events have changed that sentiment quite significantly. It is left to be seen if the same can be implemented in the spirit in which it was announced. A lot of this pessimissim is captured in the valuations of the market. Valuations are comfortable, corporates look like they will recalibrate their balance sheets towards a low debt: equity structure and this will make investing in corporate equity more attractive. So while at a macro level there are significant unanswered questions, at the micro level corporate business models are beginning to look attractive.
Wednesday, January 2, 2013
Don't Buy Recklessely : After hitting new highs, Nifty may crash to 5500 levels
Madhusudhan Kela of Reliance Capital explains to CNBC-TV18 that there is widespread consensus that 2013 will be a great year for the market and the economy on a culmination of various positive events and factors. However, he advises investors not to be overly gung-ho on equities and take a call after the announcement of the Budget begins to take effect.
Below is an edited transcript of the analysis on CNBC-TV18
Q: The market is knocking on the doors of 6,000. Is there a lot of upside in 2013?
A: The next two months till the announcement of the Budget, I expect the market will be broadly positive. The markets are up 30 percent on the back of only price-to-earnings (PE) multiple expansion virtually without any earning growth last year. The risk-reward is not as much in favour as it was six months ago.
The momentum is by the side and the market will not peak out in an environment like this where people are still cautious. So I would not be surprised if the market makes a new high before the Budget because there is culmination of - liquidity foreign flows, domestic investors wishing to participate and the roar of policymaking - before the Budget.
So I would not be surprised if the market hits a new high. But in this environment for long-term investors, who have been advocating equity. do not go to the other extreme and put everything you have in equity.
Q: So what's your prognosis- is the market going to move towards that new high after which it spends an extended period of time just trying to justify those levels and gain some kind of base or do you think its going to be an inverted-V kind of performance with all the good news in the first two months and then the market starts to come off?
A: It is too early to make a judgment. But I still feel that till the Budget there will be a culmination of a lot of positive factors. But after the Budget I would evaluate the impact of the Budget before I take a call.
Another favourable factor is that the global economic environment has been extremely calm in the last six-to-eight months. Investors seem to have forgotten the problems in Europe and America.
There is a widespread consensus among major domestic and foreign fund houses that 2013 is going to be extremely good. However, this does not mean investors can be overly bullish on the markets. The first quarter might be very positive but I don't rule out the market giving up 10-15 percent of its gains in the next quarter.
Q: There is another point of view which suggests that the first half will actually be difficult for global markets and the Indian market may struggle in that context. Do you see that as a likely outcome or do you think, with the way the market is shaping up, the market is going to touch that new high in the early part of the year and then go sideways?
A: The first quarter is when there will be maximum action in the markets. There is no doubt that the macro-economic environment will be better than what it was last year, but it remains to be seen, from a stock market point of view, how much of that has been priced in.
Q: What do you expect to see in terms of retail participation? Do you see retail participation coming in a big way once the market touches the 6000-6100 levels and will there be any kind of panic-buying this time?
A: I clearly see that coming. If retail participants wish to invest in equities, they have to be systematic and if they are already invested, there is no need to go whole-hog and invest all the funds at their disposal.
Retail investors need to be prepared for a dip because the longer-term Indian fundamentals are still intact. But after making 40-50 percent return, retail investors' expectations have to be muted.
Q: Dip of what magnitude? Will it be sub-5800 during the course of the first three-to-six months?
A: For the first six months, I would not rule out that. Again it is very difficult to pinpoint a level but if the market touches 6300-6400 before the Budget, the market can make a new high and go to 5500 by June, July or August. That is very much possible.
Q: How do you read the kind of flows we pulled last year because really thats been the most overwhelming factor for the market?
A: The FII inflows have been roughly USD 25 billion but a lot of it has not been reflected in the market. Close to Rs 65, 000 crore of these flows has gone to buy out long-term strategic stakes. Also for the whole of last year, the global environment was so bad that India was a destination by default.
So there should be little expectation of a repeat of inflows of this magnitude. I am also worried on the Rs 10-15,000 crore of redemption in the mutual fund and insurance in the last six months. So you see, domestic institutions are selling everyday.
The market's sole support rests on FII inflows and this poses great risk, It is not possible to rule out the adverse impact of reduced inflows on the market. In 2011, the market fell 20-25 percent on outflows of just USD 1 billion.
Q: You sound cautious. Is politics playing on your mind? Are you worried about the second half of the year and the impact of the elections on the run up for the market?
A: It is a combination of all the factors. The market is coming off from the 40-50 percent return in the last one year. Volatility across the world has collapsed in all asset classes and the VIX Index is at a multi-year low. An economic environment with volatility being so compressed cannot exist forever. I expect the markets to be far more volatile in 2013 and Im on a wait-and-watch mode if the markets after offering a return of 50 percent returns posts a downside in volatility.
Thirdly, all the gains in the last one year have come only on account of PE multiple expansion and a lot of it is yet to reflect on the real fundamentals. So all these factors are making me circumspect of going overboard and telling investors who have missed out on equities, that this is the time to be fully invested.
Below is an edited transcript of the analysis on CNBC-TV18
Q: The market is knocking on the doors of 6,000. Is there a lot of upside in 2013?
A: The next two months till the announcement of the Budget, I expect the market will be broadly positive. The markets are up 30 percent on the back of only price-to-earnings (PE) multiple expansion virtually without any earning growth last year. The risk-reward is not as much in favour as it was six months ago.
The momentum is by the side and the market will not peak out in an environment like this where people are still cautious. So I would not be surprised if the market makes a new high before the Budget because there is culmination of - liquidity foreign flows, domestic investors wishing to participate and the roar of policymaking - before the Budget.
So I would not be surprised if the market hits a new high. But in this environment for long-term investors, who have been advocating equity. do not go to the other extreme and put everything you have in equity.
Q: So what's your prognosis- is the market going to move towards that new high after which it spends an extended period of time just trying to justify those levels and gain some kind of base or do you think its going to be an inverted-V kind of performance with all the good news in the first two months and then the market starts to come off?
A: It is too early to make a judgment. But I still feel that till the Budget there will be a culmination of a lot of positive factors. But after the Budget I would evaluate the impact of the Budget before I take a call.
Another favourable factor is that the global economic environment has been extremely calm in the last six-to-eight months. Investors seem to have forgotten the problems in Europe and America.
There is a widespread consensus among major domestic and foreign fund houses that 2013 is going to be extremely good. However, this does not mean investors can be overly bullish on the markets. The first quarter might be very positive but I don't rule out the market giving up 10-15 percent of its gains in the next quarter.
Q: There is another point of view which suggests that the first half will actually be difficult for global markets and the Indian market may struggle in that context. Do you see that as a likely outcome or do you think, with the way the market is shaping up, the market is going to touch that new high in the early part of the year and then go sideways?
A: The first quarter is when there will be maximum action in the markets. There is no doubt that the macro-economic environment will be better than what it was last year, but it remains to be seen, from a stock market point of view, how much of that has been priced in.
Q: What do you expect to see in terms of retail participation? Do you see retail participation coming in a big way once the market touches the 6000-6100 levels and will there be any kind of panic-buying this time?
A: I clearly see that coming. If retail participants wish to invest in equities, they have to be systematic and if they are already invested, there is no need to go whole-hog and invest all the funds at their disposal.
Retail investors need to be prepared for a dip because the longer-term Indian fundamentals are still intact. But after making 40-50 percent return, retail investors' expectations have to be muted.
Q: Dip of what magnitude? Will it be sub-5800 during the course of the first three-to-six months?
A: For the first six months, I would not rule out that. Again it is very difficult to pinpoint a level but if the market touches 6300-6400 before the Budget, the market can make a new high and go to 5500 by June, July or August. That is very much possible.
Q: How do you read the kind of flows we pulled last year because really thats been the most overwhelming factor for the market?
A: The FII inflows have been roughly USD 25 billion but a lot of it has not been reflected in the market. Close to Rs 65, 000 crore of these flows has gone to buy out long-term strategic stakes. Also for the whole of last year, the global environment was so bad that India was a destination by default.
So there should be little expectation of a repeat of inflows of this magnitude. I am also worried on the Rs 10-15,000 crore of redemption in the mutual fund and insurance in the last six months. So you see, domestic institutions are selling everyday.
The market's sole support rests on FII inflows and this poses great risk, It is not possible to rule out the adverse impact of reduced inflows on the market. In 2011, the market fell 20-25 percent on outflows of just USD 1 billion.
Q: You sound cautious. Is politics playing on your mind? Are you worried about the second half of the year and the impact of the elections on the run up for the market?
A: It is a combination of all the factors. The market is coming off from the 40-50 percent return in the last one year. Volatility across the world has collapsed in all asset classes and the VIX Index is at a multi-year low. An economic environment with volatility being so compressed cannot exist forever. I expect the markets to be far more volatile in 2013 and Im on a wait-and-watch mode if the markets after offering a return of 50 percent returns posts a downside in volatility.
Thirdly, all the gains in the last one year have come only on account of PE multiple expansion and a lot of it is yet to reflect on the real fundamentals. So all these factors are making me circumspect of going overboard and telling investors who have missed out on equities, that this is the time to be fully invested.
Tuesday, January 1, 2013
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