Monday Market

NCDs cannot be primary source of funding for NBFCs

In the next two years, investors will move beyond NBFCs and banks, and start looking at other financial services stocks like AMCs, insurance companies and wealth businesses. That’s good because it would bring diversity to investments, says Shachindra Nath, executive chairman and managing director, Ugro Capital, in an interview with Ashwin J Punnen. Excerpts:

The equity market has been choppy for the past few months. What’s your take?

Sharpest impact of liquidity crisis will be on banks, NBFCs

The market has witnessed a good foreign fund investment in the recent months as overseas investors have shown interest in Indian indices. The bandwagon was later joined by the RBI, which infused Rs 40,000 crore in the market and is willing to add the same amount again in December. The strengthening rupee has helped the sentiments of FPI investors in debt markets, feels Mayuresh Joshi, fund manager at Angel Broking, in an interview with Sangeetha G. Excerpts:

Market expected to remain volatile in short-term: Sasmal

The mutual fund industry is growing steadily. The current Industry AUM of Rs 23 trillion would grow to Rs100 trillion in next 8-10 years. Broadening this investor base towards SMEs, MSMEs, and a larger segment of retail investors will give more stability to the MF industry and provide comfort to the fund managers in delivering better risk adjusted returns, feels Aloke Kumar Sasm​al, director, Money Matters and co-founder & director, Parento Info-rmative.

Market at current level is not pricing in a weaker ruling party

Unlike the earlier cycles, this time around the market has gone up over last 5 years while the earnings remained stagnated and thus the returns that we have earned from the equity market in last 5 years have largely been on account of multiple expansion than actual earnings growth, said Saibal Ghosh, CIO at Aegon Life Insurance, in an interview with Falaknaaz Syed. Now we are at a stage when interest rates are going up and rupee has depreciated quite a bit. Therefore, further multiple expansion from the current level can safely be ruled out, he added.

PE multiple is getting adjusted to interest rates

Higher crude prices put pressure on the rupee as our import requirements rise and the weak currency affects the fiscal health. For attracting more foreign funds to capital markets, the fiscal deficit needs to be in control, said Anita Gandhi, whole-time director and head of institutional business at Arihant Capital Markets, in an interview with Ravi Ranjan Prasad. At the same time, more resources need to be made available for development and growth of the economy, Gandhi added. Excerpts:

EMs may recover as commodities stabilise & capital fight halts

Global growth is likely to take a breather in 2019, led by the slowing US economic activity, which could compel the Federal Reserve to take a pause in further tightening towards the later part of 2019, said Rajesh Cheruvu, chief investment officer, WGC Wealth, in an interview with Sangeetha G. After recent sell-off, emerging market valuations are attractive and earnings too show signs of recovery, he added. Excerpts:

The Indian market has been volatile. How should an investor tread through this situation?

Nifty firms may report 15-16% growth in Q2 earnings

Crude price may moderate as supply could outpace demand, which is likely to benefit the rupee, and consequently the pessimism should reduce, said Prashant Sharma, chief investment officer at Aviva Life Insurance, in an interview with Falaknaaz Syed. Hence, the fears of fiscal deterioration could abate and foreign portfolio flows improve. Excerpts:

The market is in a correction mode. How much downside do you expect for the Sensex and the Nifty?

Large IT companies are priced to perfection

The worst is not over for all NBFC stocks and it’s the time when men will be separated from boys. RBI has ensured that liquidity remains comfortable at the system level, while SBI has expressed its intention to increase loan portfolio purchases from them, said VK Sharma, head (PCG & capital markets strategy), HDFC Securities, in an interview with Ravi Ranjan Prasad. PSBs that are facing difficulties in maintaining required capital level will be cautious while helping NBFCs, Sharma said. Excerpts:

Banks have reached NPA cyclical peak; corporate credit offset to accelerate

Steep hike in crude oil prices and alarming depreciation of the rupee are two key concerns for the market at this point in time. With currency being highly volatile, market sentiments are also getting adversely impacted. The increased market volatility in the recent months, thanks to global and domestic factors, has resulted in moderating of mutual fund flows. Shift of household savings from non-financial assets to financial assets and within financial assets, increased allocation to direct equities and mutual funds (versus bank fixed deposits traditionally) is a structural story.

Current market correction doesn’t look abnormal

The linkage between elections and inflation has been tenuous. No government likes to enter an election phase with high levels of inflation. Though inflation is broadly under control and within RBI’s comfort zone, inflationary expectations have started inching up due to rise in fuel prices and recent rupee depreciation, said Mihir Vora, director and chief investment officer, Max Life Insurance, in an interview with Falaknaaz Syed. Excerpts:

What kind of Q2 earnings you expect?