My first question to you is on the texture of the market. One thing is for sure that there will be uncertainties coming from the global markets but another thing which is sure is also that Indian markets are behaving quite maturely and the domestic macros for us are quite strong. How do you see the markets in the short as well as the long run?
Daljeet Kohli: I concur with your view that markets will be driven mostly with the domestic cues because globally we all know what kind of uncertainty is there and unfortunately, nobody can predict what is going to happen there because it depends on one man’s tweet. So, we have to wait for what we can do best on the domestic front and in fact, we as a portfolio manager have aligned our portfolio almost 80% to 90% to domestic facing companies since last five-six months and we continue to do so.
As regards on the domestic front, we are very bullish. We had released a note 15-20 days back where we had said that there is a confluence of four-five factors which is happening at the same time and that is going to drive the markets on a very positive side.
So, one thing is, of course, that the rate cut cycle which has started. After a big pause, we have seen that this rate cut started and that too started with lot of aggression when many people had expected only 25 basis cut, they have done 50 basis points. Along with this cut, they have also given you the liquidity 1%, full one percentage point which means two-and-a-half lakh crore getting added into the system.
These things will get reflected in the numbers, in the consumption cycle over the next two-three months. So, we push up liquidity, lower rate cycle, you have a good monsoon which is fairly well spread out, you have a stronger rural, you have a good inflation number well under control, so these things are all for a very good consumption cycle to start and the last three-four years we have not seen that happening.
So, most of these stocks are also available at a very attractive valuation and the macro picture is becoming good and good for them. So, most of these consumption-led stocks should do well, so that is one theme which will work very well. Secondly, because of all these global uncertainties, the positive influence of dollar or the favour towards dollar trade that is reducing to a large extent. Now, of course, it will not go away. Nobody can replace them so fast and so easily, but even if there is a swing of very-very minute percentage, that can help us. So, we are looking at that that this might lead to some of the FII inflows coming into India in a larger chunk and also it will help in this manufacturing base developing because till now last four-five years people were only talking on planning stage that we have to look at China plus one, new supply chains, but now this is a reality, everybody understands that if the US go, the biggest customer is going to throw tantrums, what do we do.
So, they are all preparing themselves and we are seeing that happening in electronics, in pharma, CDMO, in chemicals. These businesses are actually picking up very fast. There is actual action happening on the ground. Our channel checks are telling that it is no more just a planning stage or thinking stage, it is now actually happening, so which means that manufacturing will also pick up. So, all these factors together will drive the broader markets. We may not see big numbers on the frontline companies, but we are very bullish on the broader markets.
We understand that investors should focus right now on risk management and also consider buying on dips, but then which is the sector which will give some direction to the market at present? Do you think it is the banks and financials for which the results are awaited and at the same time do you think it is the consumption because the seasonality factor is playing out with the onset of monsoon, not just the consumption but we also have buckets like fertilise, agri related spaces. What is it that will help the market for this quarter?
Daljeet Kohli: So, broadly, yes, the rural related sectors will play out because they have not played in their part in the earlier rally and we have seen things turning around for them, one, because of the monsoon and second, because of the government support, with all these yojanas, the direct benefits coming to all these rural folks, they are getting lot of money in their hand, so some of that can see place in consumption.
Pharma can be one area. Pharma and chemicals will continue to perform well. But what I would say is that we are not looking at any sector taking a lead because right now it is so dispersion within the sectors. Within the same sector you might see some stocks doing very well and others not doing so well, so that means it is purely stock specific approach, sectors will be probably an outcome of that approach.
