What is it that you are making of this uptake on the consumer durables sector? It seems like a little late in the day considering all that the government has been doing, the effect on the stock markets at least should have happened much earlier.
Ashi Anand: The broad way we really look at markets is markets are in a bit of a wait and a watch mode. You do not really have clear direction in terms of what parts of the market are likely to drive the next big up move. So, as specifically on the question on consumer durables, a very big important or the one big positive of the year so far is the fall that we have seen in interest rates. With a 100 basis points cut in interest rates, that does free up a certain amount of household income that was going towards EMIs, which is now available for discretionary consumption and consumer durables fits very well within that overall space.
So, in the context of an overall market where you are still trying to see and identify what direction the markets are going to take, you have these economic cyclicals which did very well over the last couple of years but you basically now have a very high base and growth of that base is still not very clear.
You have uncertainties on the global front. You have banking which is likely to see some amount of NIM pressure in the near term. Within all of that consumer is operating as a bit of a safe haven and with rural consumption starting to come back and with hopes of urban consumption coming back, with interest rates coming down, that is where you are seeing some amount of movement in the space.
Just wanted to have your take on some of these brokerage related counters because just today we have a news flow saying that Motilal Oswal AMC has actually crossed 1.5 lakh crores in AUM and you can see the excitement in the stock and this theme has been playing well in the markets of late because with this whole thing happening, with financialization of saving rather there is indeed a lot of interest with respect to the stocks as well. Give us your sense how do you see this particular theme, are the valuations justified with the kind of growth that the companies are posting?
Ashi Anand: So, financialization of savings is according to us one of the more interesting themes to play over the coming decade. If you just look at penetration levels across financial products in India compared then to any other emerging country around our scale, some of the more developed nations, etc, there is just tremendous scope for a shift of financial savings away from traditional real estate, fixed deposits, and gold and towards the financial markets.
When you are looking at playing this theme, you do need to be a bit careful in terms of what parts of the theme you are playing. So, this is a space that we do quite actively have in our portfolios. What we do quite clearly like are wealth management, asset management plays. We see these as just direct plays on the growth the wealth and asset management sectors in India.
Brokerages is actually a place we are a bit slightly more cautious about. It is important to understand that a very large amount of the growth that we have seen in brokerages post covid has come from highly speculative F&O trading and this is a space that the regulator is very clearly clamping down upon. They have already introduced various measures and they could introduce further measures and you have seen quite sharp declines in overall F&O activity.
While going through this regulatory upheaval, you want to possibly just stay away or be a bit careful about exposures to brokerages especially in terms of how much you are paying. But wealth management, asset management, insurance these are all segments that we believe are very attractive, that we hold reasonable parts of in our overall diversified portfolio. Brokerages also could become quite interesting, but we just have to wait to see as the current regulatory environment shapes up.
