ETMarkets Smart Talk: Long term, DIIs would become the dominant players in market: Santosh Singh
“In my view, this is going to be a long-term trend with financialisation of the country. In shorter durations, the data may be volatile but in my view, DIIs would gradually become the dominant players in the market,” says Santosh Singh, Fund Manager, Motilal Oswal AMC.
In an interview with ETMarkets, Singh who has over 20 years of experience in equity markets, said: “Small and midcaps are very much bottom-up segments of the market, and we find a lot of opportunities in that space,” Edited excerpts:
What is your take on the outcome of the July RBI policy meeting? Where do you see rates headed in the near term?
The Reserve Bank of India (RBI) has been proactive in frontloading the rate hikes in the July policy. With my expectation that the inflation growth rate would start tapering down, I would expect RBI to not hike significantly from here on.
It is possible that the RBI may pause in the next policy review and may watch for the inflation data.
Equity market is taking comfort on strong US economic data. But, will the rally last? What is your take on markets?
In my view, most of the negatives are already known to the market and despite that, the markets have not fallen significantly.
From here on, unless we see some geopolitical turmoil playing spoilsport, I don’t see much downside in the market.
However, the demand is slowing down in India and that can mean that the earning upgrades may not happen. Hence, from an overall market perspective, it seems to be in a sideways direction.
What is your take on June quarter earnings? Any new trend which you spotted that could carry in the next few quarters in a specific industry?
As expected, June quarter earnings would lead to some downgrade in the consensus earnings for FY22. Clearly, the standout sector in this quarter was IT where the margin pressure was significant.
Banking was another sector where MTM losses due to increased interest rates had an impact on earnings. However, banking impact is more one off.
What is your view on small & midcap stocks? They have also bounced back in line with Sensex and Nifty. Time to buy or exit positions?
Although there has been some bounce back in the mid and small-cap stocks; however, smallcaps is still at a significant discount from its high.
The smallcap tends to get significantly more in a downturn, it looks like the market is pricing in some sort of downturn there.
However, small and midcaps are very much bottom-up segments of the market, and we find a lot of opportunities in that space.
Do you think that global developments around Taiwan could put some pressure on equity markets across the globe?
Geopolitics has been a trouble for the markets in this year, but I am not too worried about Taiwan. Other geopolitical risks which are known are already priced in from the market perspective.
How do you pick stocks for your portfolio? What is the methodology you follow?
We have a QGLP philosophy for stock picking which is buying quality stocks that have a long runway for growth at a reasonable price.
Foreign investors, which turned net buyers of nearly Rs 5,000 crore in July after nine months of selling, picked stocks in FMCG, banks, and cyclical while reducing weightage in IT and metal stocks. What is driving the strategy?
This is the biggest FII sell-off in the market in the last two decades and the markets have been able to absorb these flows without falling significantly.
Also, India may not see a recession that the US may see, and hence the country remains attractive to investors.
What is your view on metal space? Nifty metal is up over 20% in a month. What is driving rally there? Any particular stock?
Metal is the most difficult space to call, I would not get into stock specifics, but I would expect this segment to remain sideways in the near term.
DII stake in Nifty-500 at a multi-quarter high, according to brokerage report. Does this mean that in the future DIIs will be dominant players in Indian markets as the FII-DII ownership ratio is contracting?
In my view this is going to be a long-term trend with financialisation of the country. In shorter durations, the data may be volatile but in my view, DIIs would gradually become the dominant players in the market
The 12-month trailing P/E for the Nifty stood at 22.2x, 11% higher than its LPA – a sign of caution or still an attractive level to buy?
I am quite cautious on Nifty, which doesn’t mean that I expect the markets to fall, but making money from Nifty is going to be difficult given one or two more quarters of earnings cut may still happen.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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