How To Build Your Portfolio In Samvat 2079 — Alpha Moguls


Singhania: At the outset, please accept my heartiest wishes to you and your team and all the viewers. Have a great Diwali and a very prosperous New Year. 

Obviously, things are challenging, but that is the genesis of the markets. Things always cannot be hunky dory, there will always be challenges. But if you look at the last Samvat compared to this Samvat, Indian markets have been more or less flat. 

Look what has happened between the  last Samvat and this Samvat. You had major issues in China. You have had the first major war, maybe post-World War of this scale where so many countries are involved. You have had a record rise in inflation as well as interest rates. 

In the U.S., normally it takes two years to increase interest rate by 200 or 250 basis points. This time, we have had it in four months. Despite all this, we are flat. That says something about the greatness that this country has achieved in terms of resilience to all kinds of macro factors and also the global factors. 

Global factors continue to be challenging, inflation is a cause of worry. However, if you just go ahead a little bit, I think by May 2023, inflation should logically come off very sharply and it’s nothing which is extraordinary, just by way of base effect.

If you take say April-May 2021 and base it at 100, April-May 2022 was at 120 because of the sharp jump in all the commodity prices post the Russia-Ukraine issue, and if you just take today’s prices, then April-May 2023 should be like 110 for the same index. 

So, inflation in the U.S. and all should come off very sharply if these commodity prices continue. The other thing is that …information nowadays travels faster than light, and we are all grappling with the same concerns. 

As far as India is concerned, we have done very well. We are a domestic-focused economy, the 80-82% domestic economy is thriving. You have to go on the streets in this festive season, weddings are there in full force and balance sheets for corporate India have never been better. 

The other thing is we also have had inflation and we also had interest rates hike. …In the U.S. on a base of 1.25%, you have a 250 basis point hike, which is 200% from the base. So, I think relatively India definitely stands out. 

Having said that, if there is a six-sigma or an eight-sigma event in the world, then India is also going to be impacted. But at this point of time, the likelihood of that also is pretty low. So, all said and done, if the world stabilises, India should do very well. 

At the same time, again reiterating, the return expectation has to be moderate. We are not cheap. We are one of the most expensive markets in the world on a PE basis. So, we will make returns, but we will make reasonable returns as we move forward. 

On oil, our view is one of softness. In fact, we have already seen oil react to $85, $90 from the peak and OPEC is now having to cut production to maintain oil price, which I think is a positive, because they also are seeing supply coming in and demand reducing.

If you have just been tracking a few things, the rig counts in the U.S. are at an all-time high in the last two-three years of 60- 70%. The U.K. has initiated massive development of gas fields. After five-six years, they’re trying to do it and they want to fast-track it so that gas comes out maybe in the next 12-18 months. 

All this initiative should ensure that supply is pretty decent and demand has not been all that great. So, our base case is of oil also coming down further from here and that also should help India.


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