Rebase and restart, next four-five years look very interesting: Vikas Khemani


If you remember our conversation, one of the things which I had highlighted was that the market will always come back sharply when nobody expects and in that kind of market, the idea is to keep on deploying over a term time because risk-reward was very well placed. But obviously nobody can time the catalyst to the turnaround and that is what has happened!

Two or three things have replaced over the last couple of weeks. One, the global scenario has changed especially around the Fed turning dovish around the liquidity scenario and is very significant from a global sentiment perspective

Second, the general election is one of the important events ahead of us which most people were worried about. Each kind of speculations was being made. All of us in the market expect continuity of the government or at least there is a greater chance of it.

Third, with the global clue that the interest rate environment has begun falling in place, the new RBI Governor has done a great job in calming down the whole system in the aftermath of the IL&FS fiasco. For a long period of time, it was getting worse and worse. In my opinion, the new leadership has done a great job in settling down and these two-three things in my opinion coupled with the flows towards the emerging market, have helped our revival. This kind of environment is always sharp because there are lots of shorts which are waiting to be cut. There is always a little bit of buying, backed by short covering. So this is not the first time that we have seen this. The market environment sentiment has definitely changed and this is a good situation to be.

Would you be in a long-only mood in the runup to the election, or has the party just about started or is it time to take 10% chips off the table?

I do not know how to play in the short term in the run-up to elections because I think it is a very binary kind of event. My personal view is that the present government will be coming back to power, but any way you can never take a call. You can only manage your portfolio at your own risk. I have been long believed that you should deploy money over the next three to six months in a systemic manner because risk-reward of investing in Indian markets are very well in place.

I do believe the Indian economy is very well on the right track. A group of structural reforms has been done and we will start seeing fruits of that coming through soon. Secondly, if you believe that the India story is good, you remain an optimist and pick up good businesses and stay invested even if it disappoints you short term and you have to take a hit or for some macro reasons, markets come back.

I will continue to believe that India is a magnificent story. We have a much better future ahead of us and we have just begun. Next, five to seven years are very good. We had a very serious sort of setback in the recent past that has reset a lot on the basis that it has cleared the froth. The market is much better placed than what it was before. Of course, people have taken a knock on their portfolios and their wealth but there is no point in living in the past. You have to rebase, restart and as I look forward, next four-five years look very interesting.

We are seeing a lot of leadership coming in from banks. What is your stance on the overall growth outlook for banks?

BFSI as a segment accounts for a large part of the market cap. Secondly, it is very very critical for economic growth and I believe it will continue to deliver. You cannot aspire for 7%-9% growth and make money from Indian capital markets and not include banks. That is not possible. It will be a leading sector.

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