Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will have its peaks and troughs, said Siddharth Oberoi, founder of Prudent Equity and Dess Equity Advisors, an independent investment advisory company focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional clients, in an interview withRitwik Mukherjee. The Indian economy is slowly picking up pace and the second half of this financial year is likely to be even better, Oberoi added. Excerpts:
What’s your outlook on the Indian economy and the capital market in the post-Brexit scenario?
There has been no major change in the Indian economic scenario due to Brexit. The market is in a bullish phase and likely to remain so. I have no doubt, whatsoever, that expectations about the passage of the goods and services tax (GST) bill, reasonably good monsoon and improvement in corporate earnings will keep the market afloat.
What are your main concerns about the market at this point of time and why?
I have many concerns about the present market situation. Some of them are:
A. Low inflation: The lower crude oil and commodity price would lead to lower inflation. Falling inflation would result in lowering of interest rates by the Reserve Bank of India (RBI), which could re-start the consumption cycle.
B. GST bill passage: The constitution (122nd amendment) bill, 2014, commonly known as the GST bill, will be beneficial for the organised sector. With the passage of the bill, the unorganised sector will come under the purview of the new tax, which could lead to their inability to compete with the organised sector in several industries.
C. Reforms percolating to corporate profits: Changes that are being made in the power sector, cleaning of the public sector banks (PSBs) of non-performing assets (NPA), ‘make in India’ initiatives, tax rationalisation, among others, will eventually lead to increased corporate profits.
D. Good monsoon: With more than 50 per cent of the country still dependent on agriculture, a good monsoon should improve the purchasing power of consumers in the rural India.
How are foreign institutions (FIs) and investors (FIIs) looking at India? Will this outlook continue for some time?
India remains an oasis in the desert. It remains a fast-growing large economy. The positive outlook will continue with a stable rupee. FIIs will continue to look favourably towards India as the country offers a large domestic market that is expected to grow at a fast pace in the coming times.
Are there opportunities in the present equity market?
Though opportunities are less, carefully chosen stocks at the right price can give good returns in this present scenario. Some of the sectors to look for are chemicals, capital goods, real estate, infrastructure and power-related segments. These sectors are having favourable tailwinds and growth in the economy will also spell a bright future for them.
n Where do you see the Indian market five years down the road? Would you like to put any number for the Sensex in 2017?
Equities will outperform most asset classes in India. The bull market has many decades to go before a saturation is reached. Obviously, it will have its peaks and troughs. I see the market higher than today in five years. The Indian economy is slowly picking up pace and the second half of this financial year is likely to be even better.
Which are the sectors that you would bet on at this point of time and why?
I would bet on chemical and capital goods sectors. The chemical sector is having industry tailwind with several plants in China closing due to pollution issues. With the impetus on the economy by the government of the day, capital goods sector stocks should perform well in the future.
How do you make your own investments? Do you use technical analysis or employ fundamental data for taking your picks?
I take investment as a field that cannot rely much on technical metrics. Market analysis requires a personal gaze. I only follow fundamental analysis in my investment approach. Reading and researching annual reports, balancesheet, revenue, growth projection and earnings are part of the process. I make sure to follow and analyse the market and make investment decisions. I select stocks that meet my strict investment criteria and have a significant margin of safety.
An important trait we look for in an investment are: size of the opportunity – companies that generate high returns on capital and have reasonable debt levels and are available at a significant discount to its estimated intrinsic value.
How long will the pain persist for public sector banks? Is there value in the private banking space now?
Any change in the non-performing assets situation in public sector banks would prove to be temporary. PSU banks need a structural change in their working systems. The private bank space is priced to perfection, and I do not see much value in them except for very few stocks.
How should investors handle investments for the near future? What would be your message to retail investors at this juncture?
Investors should take the advice of experienced professionals with a good track record. They need to control emotions and be disciplined while dealing with equities. Investors should study companies well and buy when risk and reward is in their favour. Controlling ones greed and fear is important. One also needs to keep in mind that staying disciplined while investing ensures capital protection.
ritwikmukherjee@mydigitalfc.com
X
Lockdown is a process to limit the number of paid members in Prudent Equity. After the desired threshold is reached, membership to the site will get restricted. Existing members can renew anytime, whereas new incoming members will have to apply for membership.
The displayed number on the lock represents the number of members left for temporary closure. Whenever renewals drop, membership will open again to fill the gap between those who have left and new incoming ones. Membership thus will remain at a certain number and not exceed that.
The reason for lockdown is that we are recommending small and mid cap stocks. These stocks have daily trading volumes which are not suitable to a large membership base. Lockdown should not be construed as a marketing tool. This is a genuine effort to keep the base low so that entry and exit of small and mid cap recommended stocks by paid members is facilitated without affecting the stock price.
News / Media
“Equities as an asset class is also helpful to fund one's daughter's marriage, children's education, etc,” says Siddharth Oberoi, founder of Prudent Equity, a stock advisory firm. “One can keep adding to one's savings and investing those regular savings into equities. If the capital can compound at 20 to 25 per cen...
The real estate sector has long been reeling due to a slowdown and oversupply. So much so, developers have been continuously selling their landholding to bring down debt. Reports suggest that the promoters of DLF would be infusing Rs.10,000 crore in the company by selling a 40% stake in the rental arm — DLF Cyber City Developers Limite...
WAKE YOUR INVESTMENTS UP WITH KOTAK MAHINDRA BANK STOCKS
Indian banking industry is expected to witness consistent roll out of innovative banking models like payments and small finance banks. There will be 11 payment banks, 10 small finance banks which are expected to be launched in FY17. Meanwhile, country’s banking sector is these days passing through a critical phase due to abnormal rise in NPAs...
How to avoid risk while investing
Individual investments can be usually summarised in two words – “Returns” and “Risks.” The typical thumb rule says the greater the potential reward, higher the risk. Unfortunately, the rule doesn’t stand true in reverse order. Many a times, greater risk is simply great, ...
Is stock buyback effective for shareholders?
Stock buyback, also known as share repurchase, refers to repurchasing of shares or the stock by the same company that issued them....
On GST in Dalal Street magazine
...
FIIs will be positive on India opportunities
FIIs will be positive on India opportunities By Ritwik Mukherjee Jul 10 2016 Tags: Monday Market, Views Equities will outperform most asset classes in India....
Catching The Big Fish In A Small Pond
Blue chips are supposed to be the best stocks you can possibly own -- the crème de la crème of the stock market. These are pretty solid companies overall. They are supposed to be dependable stocks that will deliver steady returns year after year to investors. However, for investors who have lost dimes by the dozen in the re...
Five Investing Risk Factors And How To Avoid Them
On asking how feasible is it to invest in companies which trade higher than their industry average, Siddharth Oberoi, founder Prudent Equity, said, “Companies which have competitive advantages, brands, predictable earnings, pricing power have higher price-to-earnings ratio. It makes sense to invest in these companies. Companies tradin...
Inculcate A Disciplined And Opportunistic Investment Approach
Siddharth Oberoi, Founder, Prudent Equity Siddharth Oberoi is the Founder at Prudent Equity, an independent investment advisory website. His company Dess Equity Advisors is an independent investment advisory firm, focusing on providing investment advice, portfolio structuring and research services for retail investors as well as institutional cl...