Become a Great Presenter and Increase Your Influence


Contributed by: Manish Chandak

CFA Society India, Pune hosted a power-packed session on “Become a Great Presenter and Increase Your Influence” by Mr. Andrew Stotz on 15th April 2017. Andrew Stotz, who is known as one of the Thailand’s leading equity analysts, is a CFA Charter holder and has graduated with a PhD in Management Science and Engineering at the University of Science and Technology of China. He has authored many books which include “Transform your business with Dr. Deming’s 14 Points” and “You Won’t Get Rich in the Stock Market…Until You Change the Way You Think About”. He firmly believes in Educating, Empowering and Exciting people from different walks of life.

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Andrew began the session by asking his audience about their motivation for becoming a great presenter. His overriding theme for the session was: “a Great IDEA + a Great PRESENTATION = CHANGE THE WORLD!” He wanted to teach all participants excellent presentation skills so that they can present whatever great idea they have in such a way that it will change the world for better.

He described five steps to delivering an excellent presentation as below:

  1. Strong argument: Simple, with a good flow.
  2. Clear benefit: Show benefits up front.
  3. Powerful delivery: Audience feels your passion.
  4. Attractive presentation: Attention on you and your message.
  5. Energetic ending: Your energy can change lives.

He kept his audience engaged by his confident delivery and mind-blowing presentation. He used his presentation as a demonstration to put his point across. He evoked strong emotions by sharing his personal story. He surprised his audience by giving away lots of goodies to those who posted brilliant snaps of the event during the event on his live blog. This was followed by Q&A session where he patiently answered audience queries. He ended the session by reiterating his overriding theme: “a Great Idea + a Great Presentation = CHANGE THE WORLD!”


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French Elections – Importance and Impact


Contributed by: Meera Siva, CFA

National elections can have major influence on not just politics but economic policies, market, currency and investments, globally. The upcoming French election is interesting in what it could mean to the region’s equation and its impact on other countries.

France’s two front-running candidates have different economic policies. Presidential contender Emmanuel Macron is a centrist while far-right leader Marine Le Pen has an anti-euro, anti-immigration platform. The election is held in two stages, with two top contenders picked for the 2nd stage. Polls predict that Macron, a former banker and economy minister in a Socialist government, could beat Le Pen comfortably in the May 7 final round. But the war in Syria and terrorist attacks may change the sentiment and results.

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Long dollar, short euro

The fate of the euro is fragile, whether France decides to stay with the EU or leave, said Dr. Bobby Srinivasan – Professor of Finance & Trading, Great Lakes Institute of Management; active trader; author; Professor for well over 40 years. He says that Macron’s win can bring some stability while Le Pen may accelerate the fall. Exit out of euro zone is a long process and Britain may take over 2 years to complete this. Also, the exit option is good for the old who want to keep away outsiders, but it is bad for the young who may find lesser job and education opportunities compared to the past.

After the Global Financial Crisis, Euro was expected to do well and the dollar was weak. The exchange rate was 1.59 USD to euro. Currently, it is just over 1. The concerns involve that of refugee inflows through the euro zone and settling in France. The country’s working hours are low, at 30 per week. India only has a small share of trade with euro (18%), so it may not have a big impact.

Anti-establishment wave

The jitter in the market is also likely due to uncertainties in the result. Dr. Stanly Johny, International Affairs Editor with The Hindu and adjunct faculty at Asian College of Journalism, Chennai notes that the US elections showed that opinion polls can go wrong. Anti- establishment sentiments are taking root and that can sway voter sentiments, he says. Netherland, for example, saw an increase in freedom party’s vote share. The unemployment rate is high (10%) and youth unemployment rate is staggeringly high (25%). Growth is sluggish, there are issues of terrorism with many fatal incidents and there is need to spend; immigration has been a hot-button issue. So sentiments of France first, anti-globalisation and no immigration – the same script that worked for Trump in the US, may find emotional appeal.

Too big to hold

The idea of euro was probably a shaky one, as it is hard to manage the needs and issues of so many countries, noted K Suresh, President/CEO/CFO India Cements Capital, with over 28 years of experience and a regular guest on Sun News TV Channel’s live program on the securities market. Data shows that there has not been economic progress in France over the last few years. France contributes 1/5th to the euro and in the EU it has 15% voting power.

EU also needs to think of their alignment with Russia as they depend on them for natural gas supply. A leader with more alignment with Russia can be good. France’s exit from EU will further weaken euro’s strength, but bad policies of France may also impact the currency.


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Quantamental Investing Across the World…

Contributed by: Chetan Shah, CFA, Secretary & Director, IAIP

Investors, professional as well as individuals, suffer from behavioral biases. The four important ones cited by Andrew Stotz, PhD & CFA, Co-Founder A. Stotz Investment Research, as investors’ worst enemies are Loss Aversion, Confirmation, Hindsight and Overconfidence bias. You feel pain of a loss 2 to 2.5 times more than the joy from an equal gain. That is loss aversion bias. This affects your investment decisions. This bias can be overcome by zero-based thinking wherein one can ask questions like “if I didn’t own the stock, will I buy it?” Confirmation bias, which is a tendency to search and put weight for information that confirms ones belief, can be corrected by considering opposing views and putting ones idea to test. Hindsight bias, a tendency to wrongly remember that you knew the event before it occurred, leads you to believe that the world is more predictable than it really is and can lead you to Overconfidence. Both these can be overcome by being humble and admitting that you don’t know it all. Also the chances of success in investing can improve dramatically if you have a framework in place and ignore the noise in the marketplace.

Hypothesis as well as back testing should form essential part of portfolio management. One needs to verify if strategies like owning high ROA (Return on total assets) or low P/B (Price/Book) generates higher returns. Andrew’s tests showed contradictory results that companies with low ROA generate higher returns.  Low P/B works only when companies are valued very low, not otherwise. Likewise gearing (net debt to equity) and returns seem to have lower correlations. Maybe these fundamental factors form only small contributors individually. On the other hand three month price momentum strategy seems to work for both equal weighted and market cap weighted sample portfolios.  The stop loss strategy too improves the investment results by around 180bps to 260bps for top and bottom decile portfolios to 22% and 3.1% respectively over a 10 year period. The level of stop-loss (10%, 20% or 30%) depends on the countries with 20% working for most of them.

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Last interesting point, which Andrew highlighted, was that the benefits of diversifying risks start diminishing after the number of stocks held in the portfolio crosses a particular number. Ten stocks removed 64% of unsystematic risk. Additional 10 stocks will take this number to only 74% and 25 stocks will remove only 77% of the unsystematic risk. Also the portfolio returns tend to reduce with higher number of stocks and converge with all stock portfolios or market returns. Put in other words concentrated portfolios (say ranging from 10 to 25 stocks) tend to provide better returns and with reasonably lower risk. However, larger fund size may have no choice but to have higher number of stocks, else their buy & sell actions may start impacting each company’s stock prices.


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Equity Valuation Methodologies

Contributed by: Kailash Chhabria, CFA

We are all very watchful for the price we pay for the things we buy. For example, if one is to buy a mobile phone, he would visit all the online portals, compare the price with Brick & Mortar store, check for offers and arrive at the best value for the product. We are extremely vigilant in determining the right value for the product. Investments are no different. Be it Real Estate, Gold, Equities, Bonds; we attain satisfaction only when we have paid the right price. But how do we really determine the right price while making Investments? What are the inputs one considers while making investments and how do we filter noise?

DSC_0256 I was fortunate to attend a session on “Equity Valuation Methodologies” conducted by Indian Association of Investment Professionals (IAIP) and presented by Mr. Sampath Reddy, CFA, CIO Bajaj Allianz Life Insurance.  It was a very thought provoking session wherein we discussed what drives valuations and how we could have a quick check while making investment decisions.

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There is no doubt that approach like DCF is exhaustive and considers all aspects of mature businesses we are valuing. We consider all relevant criteria while applying DCF and base our assumptions on a lot of research we do on companies.  The approach requires time and ability to make right judgements. Could we not consider other time bound relative valuation approaches while making an investment decision? The question then arises what is the right P/E or P/B ratio for a company & an Industry. How should one interpret the value of a company, its future potential by usage of mere ratios?

Below are some of the key takeaways while considering relative valuation (Method of Comparables) approach to compare companies:-

While Brand visibility, distribution, Technology, Monopoly, access to natural resources are important for a business to succeed, they are not the sole drivers and firms could trade at low multiples to their peers in their respective industry. The likes of SBI trade at low multiples to peers and may not necessarily be the best investments.  Low multiples do not necessarily mean attractive investments.

The most important driving factor for a business is ROE. What’s in it for the investor? When businesses generate ROE greater than their cost of capital they tend to enjoy good multiples. It is the ability of the business to continuously report strong ROE’s which makes a good investment.

The growth of a business tends to have a direct relationship with the firm’s PE. Companies with growth rates higher than their cost of capital tend to enjoy healthy multiples. PE is constantly adjusted and rerated keeping growth in mind. For example, Infosys which commanded a PAT CAGR of 46% in FY04-07 period traded at 21.7 1 yr forward PE. While FY10-13 saw growth no’s come down to 15% the 1 yr forward PE was rerated downwards to 16.2.

The relative valuation approach may not work best for commodity driven companies and other approaches should be considered. The PE & EV/EBITDA ratios appear to be cheap at the peak of the business cycle and vice versa which could be misleading. Tobin’s Q could be considered as an alternative measure.

In addition to the above pointers, one needs to be watchful of the quality of the management which runs the business. Initiatives and policies adopted by the management go a long way in determining the prospects of business. The capital allocation decisions, dividend payout policies, disclosures, accounting policies, diversification in new businesses which are done at management discretion can make or break a business.

In words of Warren Buffett, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.
Happy Investing!!



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Why Smart Investors Do Dumb Things?

Contributed by: Shivani Chopra, CFA


The Delhi chapter of the Indian Association of Investment Professionals (IAIP) organized a speaker event titled,” Why Smart Investors Do Dumb Things” on March 18, 2017.The event was delivered by Mr. Puneet Khurana who is a renowned investor and educator. The focus of the event was to discuss in details the most common errors investors make and what makes such smart people do really dumb things.

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The session started with a discussion of how the society has evolved by the collective efforts of some smart people who came together and led to some tremendous achievements which have changed the world for good (e.g. Google, Manhattan project, Bell Las etc.). But unfortunately, the same record is not replicated when it comes to investing domain and the speaker referred to the records of hedge funds and funds of funds to put across the point (e.g. LTCM, etc.). He discussed three key differences between other organizations and a team of investors and what are the key differences in two types of human collections and endeavors. He explained that there are primarily three differences:

1.    Measurable Goals

2.    Feedback Loops

3.    Checks and Balances

The absence of factors mentioned above in individual decision making at the investment firms accentuates the impact of individual quirks in decision making. For this very reason, the first and foremost reason for errors is the human misjudgement, and hence the speaker went on to explain the science behind the human misjudgement. He compared investing to Keynesian newspaper beauty contest where the decisions are not objective but also based on the subjectivity of masses and how in investing the decisions of masses can become influential in the final outcome. Hence the investing activity becomes not only an individual pursuit but also an endeavour of understanding the wisdom and follies of masses.

The lesson started with the understanding of Biology and Human evolution and how the various parts of brain got developed providing a survival advantage. The explanation of the role of the amygdala, sensory cortex, thalamus, hypothalamus, etc. was discussed and provided a context of the physiology of decision making and what caused the brain to go into the freeze, fight or flight mode.

From here on Mr. Khurana explained the critical errors which he has suffered or observed and explained few of the key human biases that lead to errors. The key biases he discussed were Overconfidence, Rigidity of thoughts process, Activity bias, Hard Work Fallacy, Once Bitten twice shy error, Recent event Bias, Confirmation Bias, Anchoring Bias and Romantic Lovers Bias.

The speaker went on to give a detailed explanation of all these biases and how it specifically interacts with investing decisions. He was candid in providing examples from his own life where the mistakes caused him to make investing errors.

Mr. Puneet Khurana, referring to Charles D Ellis’ tennis analogy, compared investing to the game of amateur tennis where reduction of errors is a tremendous edge.

Moving forward, he then explained errors beyond the human psychology and in the realm of investing. The speaker continued with a disclaimer that the list is not comprehensive but what in his understanding are the most crucial ones. He divided the majority of errors into the following categories:

1.    Errors in Behavior (which he discussed above)

2.    Choosing the wrong battleground

3.    Errors of omission

4.    Errors of commission

5.    Error of risk assessment

6.    Errors of Portfolio Management

7.    Errors of Execution

Each of these errors was then explained in great detail with examples of companies and examples from his observations across many investors, his students and his own errors too. In short, it encapsulated a large amount of learning from the personal investments journey of the speaker.

After this, he then went on to give examples of how Checklist development has dramatically led to a reduction of errors. But then he gave a very interesting perspective that error reduction is a significant edge and takes an investor in the above average league, but it’s not enough to take the investor into the “TOP” league. After all the ship can reduce all the errors by staying on the deck, but that’s not what it is meant for.

The second part of the success equation in investing is “Insight Generation”.

He referred to the work of Gary Klein to substantiate his assertion. He then went on to explain how different investors can generate insights during their practice and have pattern recognition that leads them to shift the odds in their favor. In fact, for all the errors of omission and commission discussed, some outliers generate special insights in one or two areas, and shift the odds in favor and make money. He then went on to explain his areas of insights over a decade-long practice, where he has been able to develop patterns and shift the odds in his favor.

It was a 3.5-hour long session but was so gripping that none of the participants agreed to the breaks in between despite the offers. It was filled with real life cases and amazing insights for all the investors.



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Market Outlook…

By: Navneet Munot, CFA, CIO, SBI Mutual Fund and Director, IAIP

Equity Market ended the quarter in an upbeat mood with Sensex now up 12% on year-to-date basis. Mid-cap (+4% in March) and small-cap indices (+5%) outperformed the Sensex for the third consecutive month.

Increased appetite for emerging market assets (lured by the prospects of better growth and less-hawkish US Fed), prudent monetary and fiscal policy domestically, favorable state elections outcome led India to receive the highest ever monthly FII flow. Foreign funds inflows in equity and debt market aggregated to US$ 8.5 billion in March vs. previous high of US$ 8 billion in September, 2010). Domestic investors continue to pour money into equity funds.

Favorable FII flows, robust FDI and growing exports have had a telling on the rupee. The currency strengthened 4.7% this year (vs. 2.4% depreciation in 2016) and out-shined most emerging market peers. Excess systemic liquidity post demonetization constrained RBI’s ability to intervene and prevent rupee appreciation as absorbing excess dollars would mean further adding to the rupee liquidity.

Looking ahead, ebbing of the Trump related euphoria (in Dollar index) and strength in emerging markets (EM) economic activity since start of 2017, had led the investors to steer away from US to EM assets. Emerging Market economic surprise index has seen one of the sharpest up-moves since the Lehman crisis.

India has depicted persistent growth, reform bent in policy thinking, stability and strength in its macro-fundamentals. This provides a fundamental support to the currency. Nevertheless, the currency may still show some vulnerability from choppy portfolio flows. RBI’s policy in past has been to contain volatility. On a REER basis, the currency already looks appreciated and it is unlikely that RBI would be willing to accommodate an out-performing rupee for long.

In sum, Indian Rupee’s fundamentals look good but remain vulnerable to undependable FII flows, which in turn depend on things like execution of Trump’s economic plans, strength of EM recovery and gradual unwinding from ultra-loose monetary policy in Europe. And even a small FII outflow from India due to global reasons could trigger depreciation. To reiterate, RBI has not intervened this time and built-up their reserves when currency was appreciating and hence should not disallow the currency to retrace its recent rally. We expect rupee to depreciate by 4-5% in FY18 (same as before) but on a new base of 65 Rs./ US$ (March 2017 end).

On the growth and policy front, government continued its focus on executing the planned reform. Aadhaar is getting increasingly integrated with government’s social spending, tax collection and other administrative services.

The preparation for rolling out the GST is happening at a rapid pace. Parliament approved the four necessary bills last week, finance ministry is ironing out the tough issues related to GST and both government and private sector are working towards the adoption of IT infrastructure required in this new taxation regime. Passage of the SGST (State-GST) bills in respective state assemblies and laying down the detailed final rates for each goods and services are expected to be achieved by the month of May.

While a large part of NPAs in the bank books have been recognized and recorded, the process of resolution has been slow. This is one key stumbling block in India’s growth story. While the twin deficit challenge (Fiscal and current account deficit) have been addressed, the twin balance sheet (excessive leverage in corporate balance sheet and Bank NPA) problem persist. Private capital expenditure is hampered due to low capacity utilization and excessive leverage. Banks are weighed down by bad loans which come in the way of credit growth. Both government and RBI realize that this is one of the biggest pain points for the economy and hopefully additional tough steps are likely to be seen in coming months.

While the Indian growth drivers are primarily domestic (led by private consumption and public sector investment), the improving global trade cycle provides the additional tailwind. India’s share in world trade has stabilized at 1.7% in last 5-6 years. In other words, India did not lose its market share despite the overall poor performance and should stand to benefit from the rising global trade activity. Further, structural strength of Indian exports lies in the fact that exports from India has progressively diversified, both in terms of products and countries. This reduces the vulnerability of Indian exports to any negative development in one part of the world (such as proposed Border tax adjustment in US or sudden drop in demand of ‘a particular commodity’).

Despite the optimistic earnings projections (in high teens), equity markets are already trading at upper end of the valuation curve (18 times FY18 earnings) primarily helped by liquidity in the market. Positive global (growth related), domestic (reform related) developments and robust liquidity can keep valuations at the higher end. Hopefully supply (equity issuance) should catch up to absorb part of the strong flows. While we feel nervous about the valuations, we remain positive from medium to longer term perspective owing to inherent structural strengths of the economy, bottoming of corporate profitability and prospects of domestic flows.

NIFTY crossed 9000 levels early last month. The index has been flirting with those levels for 2 years now (NIFTY touched 8,952 in January 2015 and once again at 8953 in September 2016) only to actually cross 9000 in March 2017. While the market has been flat, so to speak, for 2 years now, there had been wide dispersion in its constituents from -43% (Idea) to +75% (Yes Bank); there are more than 10 stocks within NIFTY that have delivered 30% plus returns and almost equal number that have lost over 20% in the same period. This reinforces our belief in the strength of active bottom up stock picking.

Domestic Bond markets have been rallying recently on the back of strengthening rupee and carry buffer which led to FII inflows, attractive valuations even for domestic investors and (financial) year-end nuances. 10 year G-sec yields fell by 19bps to 6.68% by March end. The shorter-end of the curve (91 day Treasury bill) fell by 19bps during the month, thus leading to yield curve steepening. FIIs have bought nearly US$ 4 billion in Indian bonds in March compared with an inflow of USD$ 550million during the first two months of the year.

RBI is unlikely to change its monetary policy stance in the upcoming April meeting as the broad narratives that dictated the adoption of neutral stance still holds. That said, the next trigger for the yield market is likely to be liquidity management tools that the RBI uses to suck out the liquidity overhang in the system.

For FY18 as a whole, supply-demand dynamics of the government bonds, liquidity situation of the banks once the pace of currency withdrawal normalized, bank credit outlook and global outlook will take prominence in guiding the bond markets trajectory. We remain constructive, but with a slightly longer term approach as average CPI settle lower and government’s measures to widen the tax base leads to structural improvement in the fiscal balance. Accordingly, we keep taking tactical calls in duration at the opportune time (like last month).


(reproduced from SBI Mutual Fund Newsletter)

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9th IAIP Annual Forecast Event FY2018

Contributed by: Volunteers of CFA Society India

The 9th IAIP Annual Forecast Event FY2017 was held on 31st March 2017 at the BSE International Convention Hall, Bombay Stock Exchange, Mumbai.

Everytime we attend the Annual Forecast Event of IAIP, we come out with unique perspectives from the panelists. This time around Sankaran Naren, CIO of ICICI Prudential MF talked about the 4-Bs of the bull market – the best phase, the boom phase, the bubble and bust phases. According to him we have passed the easy and best phase. Nilesh Shah, MD, Kotak MF, spoke of the initiatives like savings in electricity consumption through the installation of LED bulbs across the country, or the channeling of the cash economy into the mainstream, which could the used for more productive purposes. According to Siddhartha Sanyal, Chief Economist at Barclays,  India is best placed on macros like inflation, fiscal deficit, current account deficit and the present government was rightly working on the supply side constraints. Pratik Gupta, MD, Deutsche Bank, mentioned that foreign investors have become more confident about Indian markets post state elections as they think the present regime can continue beyond the current term. While every body is positive on the India story, Prasun Gajri, CIO, HDFC Standard Life, expressed concerns on the limited number of securities to invest in based on both the size and valuations.

The rest of the key takeaways are as follows…

CFA annual forecast event highlights – survey results for FY18 expectations –

  • 77% expect equity to be best performing asset class but majority expect Sensex to see single digit growth at 30-32k.
  • 28% expect GDP growth to be at 7-7.5.
  • More than 85% expect CPI to be less than 5.5.
  • 75% expect bond yields to be less than 7%.
  • Crude: 45% expect 50-60.
  • Gold: maximum respondents expect 1100-1200.
  • Rupee: maximum people expect 66-68.
  • Sensex earnings growth is expected at 10-15%.
  • Critical driver of equities are Government policy and reforms. For GDP, key drivers will be govt policy and global geopolitical situation.
  • Salary growth: most people in equities are expecting in double digits!

Highlights of panel discussion –

🔹No worries on inflation, CAD, FD. NPA and capex cycle outlook not great. So themes are centred around consumption, GOI spending and exports.

🔹Market PE expensive but PBV and PE to bond yields is fine. Situation not alarming like 2007. Best phase where valuations were cheap is over. We are in boom phase now where multiple is given to earnings. Bubble stage will come when people give multiple to top line like it happened in dot com boom and now in e-commerce. This will be followed by bust.

🔹Metals and oil and gas are sectors from where earnings are coming. In banking it will take few years for earnings to reflect.

🔹In India government has worked across sectors to reduce margins in favor of customers. While this is not good for cos, it has been good for inflation and interest rates. The pricing on LED bulbs was reduced from 500 to 35 per bulb. As a result consumers saved 11,000 crores and in future it will lead to 40,000 cr saving in an year.

🔹three plans of GOI behind demonetization –

  • plan A was that 3-5 lakh crores won’t come back in system and they will be able to spend that amount on growth. But almost all the money came back.
  • Plan B was 1.8 Million individuals sent emails by IT. So 50k to 1 lac cr to come through taxing black money which could be 10 to 20 % of money that has come in system.
  • Plan C:  GOI expected to print less in cash by 5 lakh crores, which will remain with banks.


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CFA annual forecast event highlights continued –

🔹China was equal to India in 1980. Now it is 5x us due to credit infused boom. In India entrepreneurs are not given enough credit.

🔹In PSU banks majority of top management posts have been filled in past 90 days. In next few months some big bank arm will come out with announcement on NPA takeover. The 10,000 cr PSU recapitalization amount will have to be revised upwards.

🔹In affordable housing effective interest rate of 2.5-3% is less than America. 3.75 cr retirees have 10 lakh crores in EPF. 90 % of it can be withdrawn for buying a house. 75% for buying a car. With 30% discount today whole of India turned 2 wheeler buyer. The builders are now getting loans at 8-12% as against 14-15% earlier. So by accelerating credit growth India can have its China moment.

🔹Stability of GOI policy expected as it’s widely assumed that CEO of India Mr Modi will continue for 7 yrs. Stability of rupee is another criteria for international investors.

🔹In near term March quarter earnings may be bad and monsoon has to be looked at. But the foreign money is not coming for 2-3 months but for next few years.

🔹India a good top down story at present. But bottoms up conviction still not there for analysts. While earnings have started appearing, the cheaper valuations in some sectors and stocks don’t make sense.

🔹Equity index to see 9-10 % growth. Even if some earnings disappointments happen, market will not see sharp correction.

🔹Conservative outlook on NPA and capex cycle. But not impossible to see positive surprise. At present coal supply is abundant, investment in power generation happened, FDI was eased, roads are being built, interest rates are down. So if this continues then positive surprise possible.

🔹On being asked why is tail wagging dog – why are some small caps expensive then large caps – Mr Nilesh Shah said – we have grown up believing that men go for Olympics and women for Miss World. But now women go for Olympics and men for Mr World! Similar is case with investing – in FY15 and FY16 though the earnings growth of BSE 200 aggregate was not good, it had 105 and 111 cos showing 20% and 30% growth respectively. So while analysts look at BSE 200 aggregate as a fund manager he is only concerned with looking at those 5 companies with good earnings growth. FY18 will provide similar opportunities for finding those 100 companies with 20-30% growth.

🔹There are pockets of value in infrastructure. Metals will show strongest growth in earnings this year. In financials and telecom they are in negative cycle now but outlook is good for 3 years. It will become a concern only when analysts start giving elevated and outlandish multiples. Non affordable housing to see some deleveraging.

🔹If credit picks up then interest rates will pick up, else in a realistic scenario there may be some scope for rates to go down. While RBI may not cut rates, it may leave ample liquidity in system which will keep rates lower.

🔹With prevention of corruption act, things should improve for PSUs and they are likely to turn favourite of investors (from ugly duckling).

🔹While Indian population has become brand conscious and most listed stocks are brands, the increasing brand consciousness among non urban population, disruption from cash to cashless and GST will lead to higher volumes, profit margins and stock prices for organised segment.

🔹On global front US Fed is increasing rates at controlled pace. So not a concern.  With rupee strengthening, 45 – 50 % nifty earnings global in nature but over there change in regulation is more of a concern than exchange rate. Also India imports more than it exports.

🔹 According to RJ’s quote “If the girl is pretty the suitor will come” and India will have no issues on this front.

🔹 In 1990s, during an IPO major amount of funds were stuck for 90 days. Now due to efficient mechanism it’s cut to 7 days.

🔹For insurance companies selling ULIP is not an issue. NPS corpus also increasing. Some Mutual Funds are seeing good inflows

🔹Telecom currently out of favor but 3 years down the line industry will be organised and rational after consolidation phase.

🔹For contra call market capitalization of industry should be seen versus others. For example IT 10 lac cr Market Cap is not cheap vs other industries. In telecom it is lower versus telecom in Indonesia.


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