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'Stop SIPs, Investing In Equities; Let The Stock Market Fall': Shankar Sharma's Viral Interview — Transcript

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0:00[music]
0:10Welcome to the much awaited NDTV profit
0:13town hall and today the speaker we have
0:16in our studios is none other than
0:17Shankar Sharma Ace investor founder of G
0:20Quant Finn X-ray but I would say also
0:23one of the most controversial market
0:26speakers at least on social media.
0:28>> No I don't think so. No cha everything
0:30you put out then has a series of people
0:32who are coming aboard to say that
0:35whatever you said was wrong.
0:37>> Of course
0:38>> you think about that when you post that
0:39how many people will I upset with this
0:41post?
0:42>> Of course. [laughter]
0:43>> So it's a considered thing
0:45>> 100%.
0:46Social media is supposed to be like that
0:48right?
0:49>> If you're middle of the line then there
0:50is no traction.
0:52>> And if you're too goody goody also there
0:53is no traction.
0:55>> If you're little borderline bad boy it's
0:58good. So of all the things and of all
1:00the years that I've known you, I don't
1:01think anyone can accuse you of being
1:02goody goody. That's that's
1:04>> not even my mother. [laughter]
1:06>> Okay, that's good to know. So here's
1:09what we're going to do in this show.
1:10Here's the format. We'll have a couple
1:12of questions with Chunker and then of
1:13course our brilliant team, all our
1:15anchors, researchers, and the NV Profit
1:17Newsroom is here. They're going to be
1:19asking questions as well. But you have
1:20an opportunity to write into us. All of
1:23the uh handles are on your screen where
1:26we will pose your questions to the one
1:28and only Shanka Sharma. I'm going to
1:30start with um I think one of the um
1:34controversial or more controversial
1:36things that you put out recently a
1:39thought that Indian equity markets will
1:41actually have to take the brunt let
1:44markets crack for some of the pain that
1:47we're seeing in our ecosystem to ease.
1:49What were you trying to say? Just recap
1:51that for us. So it's a pretty
1:54straightforward theory that look any
1:56country which is going through some kind
1:58of crisis and let's accept it that we
1:59have some degree of crisis it's not 1991
2:03but it is pretty bad
2:05after 2013 in that you have two markets
2:09functioning or let's say three markets
2:11functioning one is a bond market your
2:12local bond market second is your
2:14currency market third is your stock
2:16market bond market the RBI can manage
2:18because it can do the OMOS and keep the
2:20rates yields down which is what has
2:22happened. I don't know how long that can
2:24continue but it has happened. Then you
2:26have the currency market which is a more
2:28global market and a stock market which
2:30is also a global market. So the the
2:32market that you have controlled is the
2:35least globalized because you can control
2:37it and that's why you can control it and
2:39on the other hand currency is something
2:42you're trying to control using reserves
2:45in India which as I wrote in my article
2:48in mint paper was that these are not
2:50earned reserves these are rented
2:52reserves barring the invisible component
2:55which is your remittances and your
2:57software exports uh remittances other
2:59than that it's all rented
3:01rented money you cannot use to defend
3:03your currency. It's like a promoter
3:05raises money
3:06>> and then he goes out and starts buying a
3:08his his own stock with that to prop up
3:10his stock.
3:11>> It's not possible. So the only thing
3:13that you can let go of is that the stock
3:16market because the stock market here is
3:19giving the FIS a very easy exit
3:21liquidity. And this I wrote a year and a
3:23half back and now you can see exactly
3:25the effect of that play out that you're
3:27hammeraging half a billion dollars or so
3:29a day. These numbers are absolutely
3:31staggering. You cannot continue this
3:34path. So India is for example going to
3:36raise I don't know 3040 billion through
3:38the FCNRB. That's what is talked about.
3:40>> Yeah.
3:40>> That's 2 months of outflows.
3:44FI still have $800 billion to go. So
3:47you're raising a liability to fund
3:49exits. Very different from 2013 when if
3:52you see the data we actually had a net
3:54FI inflow for the FI FI14.
3:58There was no bleeding and all that. So
4:00the buffer that was so the cash that was
4:02raised by India was a buffer. It wasn't
4:04to fund exits. This time you're raising
4:06cash to basically fund exits. It's
4:08ridiculous. So my view is that you have
4:11to stop the stock market from providing
4:14these easy exit liquidities. FYI in
4:18doing so of course you'll have to raise
4:19rates on mutual funds and do whatever. I
4:21mean I'm not the policy maker. Let the
4:23market fall. In my 35 years of this
4:26business, I know fi walk in when there
4:28is a big market crash because everything
4:31then changes. So that AI trade will then
4:33okay AI is risky. India has fallen 30
4:3640%. Let's go back in. That's the way
4:38you will solve this problem. Otherwise
4:40raising liabilities to fund exits is
4:41absolutely not a winning game.
4:43>> Yeah. But how do you let the market
4:44crash? Then it comes down to the
4:46domestic Indian investor who has stood
4:49up in the last five orders.
4:51>> I don't like this term stood up. What do
4:52you mean stood up? market then you're
4:54not going to get paid to be brave and
4:56all that. Yeah.
4:56>> But if they've come
4:57>> this is not this is not the army or the
4:59soldiers fighting on the front.
5:00>> No I'm agreed. I'm not saying
5:01>> we are foreigners and we are you know
5:03fighting.
5:04>> Okay. So let's remove the morality from
5:05it. Let's remove all of that. But the
5:07fact is that they've come here for a
5:08reason. Right. People are investing for
5:10a reason. They saw their FD returns.
5:12They want to make more money in their
5:13lives and they're coming here because
5:15they've got returns. They want to be
5:17there when this dip comes. That's why
5:19you have people putting money in SIPs.
5:21Why should they walk away right now? I'm
5:23saying they don't have to walk away.
5:24They need to be slowed down.
5:26>> Now, either it slows down on its own.
5:28So, you saw that SIP closures exceeded
5:31the new openings I think in April. I
5:33don't know what the May data will will
5:34show. If it happens organically, well
5:37and good, but pro probably it won't
5:40happen so easily. In the interim, you
5:43would have bled another 30 30 40 50
5:45billion of hard currency. India cannot
5:49fight a two-front war. You can't fight
5:51currency. In fact, three front bond
5:54market, currency and of course the stock
5:56market. If there is one lamb you have to
5:58sacrifice, sacrifice the equity markets.
6:00They always come back. Always. There is
6:03no history of civilized markets where
6:06markets crash and they don't come back.
6:09Everything comes back. So you also give
6:11the locals in a chance to buy buy cheap.
6:13What's wrong with that?
6:14>> Okay. And what would be the mechanism of
6:16sacrificing this lamb of equity markets?
6:19Simple taxation is the best mechanism.
6:21>> You're saying tax more entire market is
6:23saying tax less.
6:24>> In the '90s, in the '90s when India
6:26opened up to FIS, uh FIA taxation was
6:30zero. It was on paper something, but
6:31through Mauritius, they could take
6:32advantage of the DTA and come with zero
6:34taxes. Domestic investors were taxed
6:3720%. So the differential was a 20%
6:40differential. I am saying what is we
6:42needed dollars then, we need dollars
6:43now. Just do it. I know it will not
6:46happen because all of you guys will
6:48[laughter] will start demonstrating in
6:50front of India gate and all that with
6:52candle lights and all which which is
6:53what people
6:54>> market participants don't demonstrate
6:55anywhere they demonstrate
6:56>> they do it only I mean people do it for
6:58stray dogs I think [laughter]
6:59>> on Twitter yeah
7:01>> so I think that's the only way you need
7:03to disincentivize this engine it is a
7:07runaway train and it is causing a macro
7:10problem if there was no problem I
7:12wouldn't be saying that but I'm saying
7:14you have 550 or 600 billion dollars of
7:16reserves. They are rented reserves if
7:18they keep flying out the door at a half
7:19a billion, a billion a day. You're not
7:21going to be left with a lot of it by the
7:23end of the year.
7:25>> Okay, query is flying in and we'll get
7:28to them. But first, we're going to go
7:30inhouse and of course our entire team
7:32here, we'll start with you.
7:34>> Hi Shankar, this is Hal here. You know
7:36your point taken when you're talking
7:38about what needs to be done.
7:40>> You have no option. You have to take my
7:41point. [laughter]
7:42>> No, I want to counter this. You're
7:44saying at this point in time SIP need to
7:47slow down. I was just picking up a
7:49little bit of data where your fresh SIP
7:51registrations have hit a 3-ear low.
7:54>> Your SIP stoppage ratio has risen as
7:58well because it's gone up to what 101.1
8:02>> in April versus what 52 75 94 between 24
8:06to 26.
8:08Does this mean that this is the starting
8:11point and from here slowly steadily
8:14staggered way you will see FIS coming
8:16back because this is exactly what you're
8:19alluding to that SIP's somewhere have to
8:22come to a standstill
8:23>> look
8:24>> people are not putting fresh money and
8:25two the other point is you've called
8:28India a haunted havi right now so what
8:30is it that FIS are seeing which domestic
8:33investors are not able to see or are
8:35they also starting to see that
8:37>> so that's the point I
8:38chatting with Tamana before the the
8:41program started that last 24 months in
8:44my personal investing journey on the
8:46global macro front has been the
8:48smoothest ride I've had in a very long
8:50time. The entire world has been having a
8:52party. Entire world India unfortunately
8:57along with maybe Philippines and
8:58Indonesia are the bottom three markets
9:00out of 40 markets that I invest in.
9:02Bottom three, India has never been in
9:04that position to the best of my memory.
9:06It's been middling to the top end of the
9:08markets first time and this is therefore
9:10the problem the haunted havi thing is
9:12because you're not part of a large group
9:15of emerging markets that are
9:17underperforming you are just in a pack
9:18of one that's where the problem is if
9:21you were a larger pack no problem now
9:23question is why the question is
9:25obviously AI is one angle domestic
9:28growth is another angle currency all of
9:30that put together tells me that you have
9:32a problem recognize it but the solution
9:35is not going to be raising more FCNR or
9:38doing a research in India bond kind of
9:40thing because today's environment is not
9:432013 where rates were too low the
9:45spreads were very wide as a non-resident
9:47I could get a lot of leverage and lock
9:49in 4% and you were levered five times
9:52six times you're making 20%. Today you
9:54will not make that. So what is the
9:56solution? The solution is either
9:58organically mutual fund inflows stop or
10:01come down or you make them come down.
10:04Now organically it'll drift down. I
10:06think it will my take over 12 months. By
10:09that time you've lost $50 billion. As I
10:11said still have 800 odd billion dollars
10:14to go from FIS. You don't have that much
10:18cash to just keep putting out and giving
10:20foreigners easy exits. There's a huge
10:23wealth transfer.
10:24>> No, but okay. So, as as an FII, as an an
10:29an NRI, uh do you how attractive or what
10:32is your assessment of all the moves that
10:34have taken place in the last week or so?
10:36What the Reserve Bank of India has done
10:38the removing of taxes on uh investments
10:40into government securities? How do you
10:42assess those?
10:42>> Okay, so let's take that one first. In
10:45my view, that is a good move. But the
10:48point is Indian bond deals are
10:49artificially low. it was 7% or so 6 and
10:52a half 7% when the currency was 848 85
10:55it's still the same when your currency
10:57falls your bond your bond yields have to
10:59go up to compensate here that
11:01compensatory mechanism has not happened
11:03because the RBI is obviously keeping the
11:05the yields low therefore it's not
11:08attractive enough for 7% rupee yields
11:11for any FI when your bond yields in
11:13America 4.5 or five depending on what
11:16what maturity you take it's not a good
11:19enough reason for people to come come
11:20into the bond markets. One very
11:22important thing, the total bond market
11:24investments in India from the time it
11:26started is only about $75 billion total.
11:31>> And that out of that one year, I forget
11:33which year was $28 billion.
11:36That's your total data of flows into
11:38debt markets. That was when we were not
11:40in a fragile one kind of situation. So
11:43put it in context. Yeah. I mean the
11:45market is telling you 7% yield is not
11:47attractive for a dollar investor into a
11:49domestic uh debt markets
11:52and from the FCNR part if I don't know
11:55what banks will offer maybe they'll
11:56offer 6% or so but the funding cost is
12:00going to land at my doorstep as a
12:01non-resident at maybe 5 and a half the
12:03spread is half% maybe 1% is that good
12:06enough to bring in 50 billion I would be
12:08very very surprised if it does
12:10>> okay so that is not necessarily the most
12:12attractive thing let's get more
12:13questions in Alex.
12:17>> Hi Shakar. Alex
12:18>> and let me let me add to that you put a
12:20duty on gold.
12:22>> What 15%.
12:24>> Correct. So what's the holy cow thing
12:26about equities?
12:27>> I was actually going to ask about gold.
12:29So
12:29>> I know what you're going to ask.
12:31[laughter]
12:31>> You can actually read my mind. But uh so
12:34you've spoken about the equity market,
12:35but why not curb gold? Right? Because
12:38they've done it.
12:39>> They've done it. But why not stop
12:40completely? It's not a productive asset.
12:43>> It's not a productive asset.
12:45>> It's productive for the people buying
12:46the gold. It may not be productive for
12:48the government or for the economy in the
12:50sense you think it is. But for people
12:52buying gold in India, that's the only
12:55pressure cooker steam let off that exist
12:58to protect your capital from a dollar
13:01appreciation against the rupee. There is
13:03no other tool available. Otherwise,
13:06India's financial markets are all about
13:08financial repression. Correct? This was
13:11the only route. Now you have taxed it.
13:12Now you want to stop it.
13:13>> Counter to your mutual fund point,
13:15hybrid as a category is now a pretty
13:19large category, right? You talk about
13:21balanced advantage funds, multi-asset
13:22funds, etc., etc. These invest in
13:25government bonds as well big buyers of
13:27government bonds. So if you stop SIPs
13:30and there are quite a few SIPs that are
13:31now going into these hybrid funds you
13:34stop SIP SIPs or you curtail fresh flows
13:36into mutual funds you don't have a buyer
13:39for government securities in India isn't
13:41that counterproductive
13:42>> I don't know what the data is about how
13:44much goes into GSX from the mutual fund
13:47part but I think we still have a large
13:49body of potential or real investors from
13:51the mutual from the from the insurance
13:53company pension funds so there is still
13:55a large enough body and then you can
13:58channel them through debt funds.
14:00>> So hybrid is and balance is a different
14:02animal but nothing stops you from
14:04investing in a
14:06>> do that fix that increase equity tax
14:08reduce the bond bond tax as you've done
14:11for FIS
14:12>> you know the the point about and you
14:14said that it's there's no army coming in
14:17and you shouldn't look at it that way
14:18that domestic invest in Indian investors
14:21should come and fight off the foreigners
14:23etc. Okay, that's I I I agree with you
14:26there. There's it's misplaced. But the
14:28fact is and we've seen this for the last
14:3120 25 years this cry that not enough
14:35Indians invest in equity markets because
14:38the markets it's shallow. Finally,
14:40they've come to the table and you're
14:41saying banko or at least you know
14:43>> you want to hear my real view
14:45>> always. Okay. Only real view.
14:46>> My view is equity markets are meant for
14:48big boys and professionals. They're not
14:51meant for Mr. Joe on the street because
14:55the data does not support equity
14:57investing for the retail investor. Best
14:59case you make maybe 10 maybe 12%. Those
15:02days also in my view a little bit of a
15:05hindsight and past if you're going to
15:07make 10% 12% 11% minus the tax of
15:10whatever 15 16% you're left with 9 and a
15:12half. Divide that by volatility. Annual
15:15volatility is about 15 20% in India
15:17historically.
15:19What are you left with there? Nothing.
15:21You cannot on a risk adjusted basis beat
15:25even a fixed deposit because in fixed
15:26deposit you have no risk to begin with.
15:29You have no volatility to begin with. If
15:31you do it in a decent bank you'll get
15:32your capital back. So you have return of
15:35capital and a return on capital. In
15:38equity potentially best case is a 10%
15:40headline number 11% minus the tax
15:43divided by the volatility you're left
15:45with not much. So that's what I have
15:47always believed for 35 years all my
15:49relatives my friends they have pestered
15:52me over decades and I've told them
15:55equity market and today they thanked me
15:58and I've tweeted this my sister we were
16:00we gone to for a holiday in Bali papu
16:02you never tell me any tip I said if you
16:04want me to remain your brother you're
16:06not asking me for stock market tips
16:09because if it has reached her that means
16:10this thing is out of control anyway.
16:12>> [laughter]
16:12>> Oh my god.
16:15>> To be a fly on the wall on those family
16:17[laughter] holidays. No, but you know I
16:19I don't know. So we have a lot of
16:21viewers who are coming in. I want to
16:22know their views on this as well. Uh cut
16:26to two years ago and
16:28>> look I know you're you are catering to
16:30the retail public. I should not be
16:31saying this.
16:32>> No no we we
16:34you called me so you you you will get
16:36exactly what I think.
16:37>> That's perfectly fine. You don't you
16:38don't have to apologize for your views.
16:40We're here to listen to your views. What
16:43about the people the Mr. Joe and Miss
16:46Jane who made a significant sum of money
16:50uh when they came in in co they did make
16:52money if you remove the last year or so
16:55and maybe some of them are still sitting
16:57on profits and they saw their lives
16:59change they saw uh potential open up
17:02which they couldn't before.
17:04>> I don't you say are you saying that was
17:05an aberration and can never happen
17:07again? No, I don't think it's an
17:08aberration, but it doesn't happen as
17:10frequently as people think it should
17:14happen. Over 35 years, we have had one
17:17good bull market. 2003,
17:18>> in how many years?
17:19>> 36 years.
17:20>> In 36 years, we've had one good,
17:22>> one solid proper kosher bull market,
17:25which was a 4 to8 bull market in which
17:28it was a big broad bull market. small
17:31cash, midcar
17:32of course they blew out the lights was
17:35about you have had virtually no returns
17:38till 2020.com
17:40I don't count as a bull market it was
17:42just you know a bunch of stocks across
17:44the world in tech but the real economy
17:46EPS numbers were all flatlining there
17:48was no growth it was all of I think one
17:50and a half two years so nobody really
17:52participated except the again like I
17:54said the big boys so remove that hersa
17:57again we have to remove for obvious
17:58reasons you're left with one bull market
18:00and then we had this one.
18:02>> Okay, which actually in terms of returns
18:04gave you virtually 40% less returns for
18:06the 4-year period that it lasted as
18:09compared to the 4,000 uh 2004 to 2008.
18:12It will not replicate itself again
18:14within 2 3 4 years. I have given a view
18:182 years back that you will not see much
18:19headline return from the nifty for the
18:22next 5 years. That was in 2024. You can
18:24see we are already halfway there. I
18:27don't think anybody in his right senses
18:28can think barring some people who
18:31predict one lakh 30,000 on nifty or
18:32census or whatever it is at least I'm
18:34not in that camp you might go back to
18:3685,000 census where it where where the
18:39where the bare market started so bottom
18:41line is for people thinking the last
18:43four years the previous 20 to 24 will
18:45replicate itself it will happen but
18:48it'll happen after a long time do you
18:50have the staying power for that
18:53>> how many people look India India is
18:56still a lower income country. Equity
18:59markets are meant for high income
19:01countries. So you can say US equity
19:03ownership is 60%. They are rich. This
19:06100,000 per capita, social security,
19:09medicaid,
19:11there's nothing. And now you have an EMI
19:13equivalent of an SIP going out of your
19:14bank account every month. Sooner or
19:17later you will ask the question, what am
19:19I getting in return of this?
19:21>> So my view is equity. It's not too
19:23that's not an correct view. I was going
19:25to ask you are you a bear in this market
19:26right now?
19:26>> No, I'm not a bear. I' I've been putting
19:28in money. I put in a lot of I put in
19:30like 100 200 crores in the from you know
19:32from the bottom of the March. I tweeted
19:33also on March 11th.
19:36When people say bear or bull I I am
19:38both.
19:39>> So I'm a hair as I always say. I'm
19:41bearish on Indian large caps. I'm very
19:43bullish on Indian small caps. But how
19:45many small investors can play small
19:47caps?
19:49It's not possible. Right?
19:50>> You know I actually have a question from
19:52Prashant. He's writing in from Bangalore
19:54and he's exactly asking this question.
19:56Where within small cap should investors
19:58put their money. Shankar, after this
20:00gloomy picture, you have to give them
20:01>> It's not gloomy. It's not gloomy. It's
20:03cheerful picture.
20:04>> After Okay. After this realistic picture
20:05from your point of view, you have to
20:07also you have to also give them
20:10something to take away. So he's exactly
20:11asking this. Where within small cap
20:13should investors put their money?
20:15>> No. Where? I mean like that like I said
20:17it's a professionals game. You can find
20:20a good small cap manager. you can find
20:22you know
20:23>> what have you found exciting uh in and
20:25if you don't want to take stock names at
20:26least spaces what have you found
20:28exciting in the
20:29>> my view my view is that in India the
20:32trade that will play out and play out
20:33well will be anything to do with
20:36technology because we are under
20:37reppresented in tech in India that's
20:40been my bet over the last two years in
20:42this bare market I put money into what I
20:44consider Indian tech companies not IT
20:46services there are smaller hardware
20:48engineering companies and stuff like
20:50that I put in there I think That is
20:51still the only place you will make good
20:54money. Other than that, buying a
20:56domestic retail business or a another
20:59apparel business this and that I think
21:01consumer side is going to be badly hurt.
21:04We know that you can see that
21:06>> tech
21:08commerce is not exciting you.
21:10>> I mean it excites me to see the kind of
21:12prices they offer me on my app but other
21:14than that I don't I don't see how on
21:16earth this business has any meaning at
21:18all. uh I don't think it can make money
21:21or not make money to justify the
21:23valuation. Then that's the other
21:24problem. We are still a damn expensive
21:27market.
21:28>> If you compare our uh you know these
21:31platform companies or whatever it is to
21:32global there's no comparison and I'll
21:35tell you give give you one example in
21:37the '90s when markets were just opening
21:40up our commodity companies. So the
21:43Hindal coat steel Yeo they used to trade
21:46at 20 30 times earnings 90s when the FIS
21:50came in and we said sir this is a great
21:52buy that is a great buy indulco this and
21:55Indian aluminium this and they said you
21:57guys are nuts I'm 30 times for a steel
22:00or a uh aluminium company said but yeah
22:02but India is expensive they said wait
22:04give it 5 10 years you will all trade at
22:06you know single-digit multiples exactly
22:09in 5 years they were all down to five
22:11times eight times more global ized
22:13convergence of multiples. I see no
22:15reason why our platform or these
22:17so-called new tech companies will
22:19command these kinds of valuations. They
22:21will compress down down to more rational
22:24levels. That's the real problem here.
22:26And now you got a few of them in the
22:28nifty by the way.
22:29>> And if you want to fire in a question uh
22:31on to be part of what is already
22:33becoming a very very interesting
22:35conversation, I can already see all the
22:37comments that are going to come to some
22:38of the things that you're seeing. Well,
22:40here's what you do it. All of those
22:41lines on your all of those numbers on
22:44your screen. Okay, we're going to start
22:46uh with a question from uh our team team
22:49NDTV profit char is coming in with his.
22:52>> Hi Shanka sir. Uh sir, we spoke a lot
22:54about the secondary markets but primary
22:57markets is also where a lot of stress is
22:59there. We have overpriced IPOs coming
23:02in. MNC IPOs especially here right now
23:04they haven't even touched their IPO
23:07prices. All of them are down 30 40 odd
23:09percent. So there is a liquidity issue
23:11do you think? And even you can see QIP
23:12deals are also happening where DIS are
23:14participating. So how do you see this
23:16liquidity moves happening especially at
23:18these expensive values?
23:20>> No I just think in the last four years 5
23:24years
23:27I was going to tweet this but I'll say
23:28this now that I think SIPs have been a
23:31great product. I mean they have made a
23:32lot of money except they've not made
23:35money for the SIP investors as much as
23:37they have made money for VCs, PPS,
23:40family offices and of course FIS. So
23:42it's a great product for the four major
23:45selling groups. So IPOs have been OFS's
23:48in reasonable part. Uh, of course the
23:51the family officers have cashed out big
23:53time because somebody made a plastic
23:55business, paper business, this business
23:57and they had no clue, no hope they would
23:59ever get these exits and now suddenly
24:01they're billiondoll, you know, family
24:03offices. All that money has been given
24:05through a wealth transfer mechanism
24:07called SIP to all these informal
24:09investors. As I said, secondary is a
24:12problem. primary has been equally a
24:14problem when through aggressive
24:16marketing
24:17you know and mutual funds are also just
24:19a the front face for m for the average
24:22investor right so anchor books you know
24:26retail participation retail frenzy this
24:28is all gone totally bonkers and 10 20
24:31years from now when they write the new
24:33chapter for a book which was a popular
24:35book back in the day extraordinary
24:37popular delusions and madness of markets
24:41I think this is going to the first
24:42chapter when how the average Joe really
24:47give fantastic money-m opportunities to
24:49these four most let's say of the group
24:52who do you think are the smartest these
24:54four categories and you gave them exits
24:56right so the IPO market must also
24:59collapse I don't think anybody should be
25:01in the frame IPO market dead I think
25:05it's a very good sign let it mature down
25:07to more reasonable valuations when
25:09they're leaving money on the table for
25:11people And for God's sakes, don't don't
25:13please approve the big mega IPOs that we
25:15are now hearing about. Delay them by 6
25:1712 months otherwise we going to lose
25:19another 10. There is there's one DRB
25:21filing today 2050 billion it'll fly out
25:24the door
25:25>> you know delay
25:27but I don't think it's a good thing for
25:29the country to bring in these mega IPOs
25:31where the exitors will get fantastic
25:34number the the dollars will flow out. So
25:36IPO market moderation is a equally
25:39desirable outcome of the current bare
25:42market. We need to conserve our capital.
25:45We are just blowing it up.
25:48It's ridiculous. At least iPhone got
25:50something in return to just what do you
25:52have? You just have vapor.
25:54>> So how does the average Joe then make
25:56money? So at the end of the day the
25:59query is there. You're saying IPOs bad
26:02idea, good only for FIS and other uh
26:05investors, family offices, etc. Uh
26:07you're saying uh markets are treacherous
26:10terrain right now. SIP is like a forced
26:12EMI.
26:15>> H good question. I believed gold is a
26:19fantastic investment by and large for
26:20Indians even with the duties that are in
26:22>> even now. even now uh I mean it's not
26:25going to give you the returns it gave in
26:27the last two and a half years but still
26:28a pretty good area real estate is a very
26:31good area bank fixed deposits corporate
26:33good corporate deposits those are your
26:36assets I would think should be 80 90% of
26:38an average investor's uh portfolio 10%
26:41you can do mutual funds and all that my
26:44sense is people have gotten marketed to
26:47very aggressively in the last it's been
26:50a fantastic marketing game by the whole
26:52fund management industry And kudos to
26:54them. I don't blame them. Please
26:55understand that they are doing a
26:56business.
26:58Like the merchant bankers who sold
27:00overpriced IPOs. I don't blame them.
27:02They are doing a job. It's your fault if
27:04like an idiot you went and put in money
27:06into all these IPOs and kept you know
27:08buying buying all the SIPs. That's your
27:10fault. I think ultimately India will
27:14remain a financially repressed market
27:16when your returns will not come that
27:18easily to you. That's it's a pure
27:20financial repression
27:22>> and equity markets is the place which is
27:24promisingly so that the repression
27:26you'll make money the unintended
27:28consequences you're not making money but
27:31the sellers are
27:32>> family offices VC's PS and FIS
27:35>> let's let's go into how you're looking
27:37at Indian markets right now and you know
27:39spend the time that we have talking a
27:41bit about that um a lot of things
27:44externally have been a pain point for
27:46India uh you have uh this geopolitical
27:49crisis It's actually in our extended
27:51neighborhood u oil prices have gone out
27:54of control. Uh the rupee as a result has
27:56been depreciating and then there is this
27:58whole AI wave happening and then we've
28:01been left outside that party entirely.
28:04How much of it can we recover from or do
28:06we have to wait for these mitigating
28:08factors to fade?
28:10>> Okay, if you want it from a data
28:12standpoint, I'll give you the answer.
28:13And the other night I was sitting with a
28:15very old friend of mine who has been an
28:17FIA for 30 years.
28:19and he was saying look the weight of
28:21India in the emerging market index Msei
28:24is I think about 11% now
28:27most funds in the world are underweight
28:29India they have about average median
28:31fund is about 8% weight so they're 3%
28:34underweight okay in uh uh in terms of
28:38India the question is that 11% weight of
28:43India in MSEM everybody is at 8 at what
28:47point do fi say it's time to neutralize
28:50our underweight and go to equal weight
28:52with the MSEI index. It's still a large
28:54market. You cannot ignore India.
28:57>> In my view, you can hasten the process
29:00by engineering a market crash, meltdown,
29:04whatever you want to call it.
29:05>> That will bring back people because
29:07suddenly that 11 would have become seven
29:09or eight.
29:09>> Why should we as domestic investors
29:11suffer for FIS to find this market?
29:14>> You will suffer anyway. I mean look do
29:16you want to run out of foreign you know
29:17the the the precious rented capital we
29:20have in our forex reserves you have to
29:22make choices as a patriotic Indian
29:25everybody must say key we are not going
29:27to participate in this ridiculous thing
29:29in which fis keep taking dollars out of
29:31India
29:31>> by what by not doing sips
29:33>> yeah not doing mutual funds I know none
29:36of my CIO friends will be liking me much
29:39after this but [laughter] that is the
29:40reality that's just the plain math
29:43>> so you are saying
29:44>> let me also clarify One thing
29:47interest
29:50I am a foreign investor I'm neutral to
29:52all the domestic you know all of this I
29:55say this with complete neutrality the
29:58way to save forest reserves you have to
29:59plug this big leak in the boat
30:03there is a big leak happening and you're
30:05plugging it with little FCNR this and
30:07that
30:10you have to stop this this is madness
30:13now you your question
30:15That's not my problem
30:17>> really
30:18>> as an FI
30:20>> I'm saying even as an Indian
30:22>> why should you just go into something
30:25just because
30:31>> okay um let's let's let's come to more
30:34questions inside and externally I this
30:37is an interesting one because we spoke
30:38about AI as one of the factors which is
30:40why India Indian markets are not looking
30:42as interesting Atul Ahuja from Delhi is
30:45writing in. He's asking is AI the future
30:47of tech or another bubble in the making?
30:49I want to couple this with the gigantic
30:52IPOs which are out there the public
30:55office in the American markets. We were
30:57speaking to someone from Black Rockck
30:58yesterday who saying this is a literal
31:00phone call to global fund managers
31:01saying show me the money. If you have a
31:04SpaceX anthropic today open AI has
31:06talked about it and that's where the
31:08capital is going to flow.
31:09>> Do you think it's a bubble or is there
31:11something real there?
31:12>> No, it could be both. I mean, why do you
31:14have to choose? In my view, the
31:16valuations that SpaceX is asking for is
31:18absolutely batshit crazy. It's
31:20ridiculous. I mean, it and if you look
31:24at the perspective, I've read excerpts
31:26of it here and there, it sounds like
31:28Tennyson's poetry. And I mean, this is
31:29not a serious financial document.
31:32But hey, anything to do with AI is
31:35getting capital. We've seen that in the
31:36com boom and anything to do with a
31:38website was getting capital. It did not
31:40end well. My sus my suspicion is this
31:42will also not end well.
31:44>> So as a foreign investor, you're not
31:45investing in SpaceX.
31:46>> No. No. No. No chance. No chance.
31:48>> Anthropic Open AI.
31:49>> No chance.
31:50>> Nvidia.
31:50>> No. I have got
31:52>> TSMC.
31:54>> I have TSMC.
31:55>> I have Intel. I have a lot of
31:57semiconductors. I don't have Nvidia now.
32:00I exited around $180. It's it's up. I
32:03think it's about the same or maybe $10
32:05more. So semiconductors have been a big
32:07driver of my profits from 2023 when the
32:10socks index started to go up. But I'm
32:12not a believer. Look, I I'm an investor.
32:14I don't have to be a believer
32:17>> and I believe nothing but I play
32:19everything.
32:19>> That's my philosophy here.
32:21>> What are you
32:29opportunity? You talked about some
32:32>> so power equipment sector looks good to
32:34me because again India's building data
32:36centers I think that will be a
32:38structural demand in terms of everything
32:41to do with power and power supplies
32:43cabling optical fibers you know
32:46equipment that supplies the plumbing to
32:48data centers I think that's a good theme
32:51I don't want to say 5 years but at least
32:52one year it looks a pretty predictable
32:54theme and you can call it an extended
32:57tech ecosystem
32:58>> that looks good I mean I think
33:00>> it's run up a fair bit.
33:01>> I still think there is headroom because
33:03India will attract a lot of capital on
33:05in terms of the the data center part
33:07especially given the problem in the
33:09Middle East
33:10>> where obviously we know data centers
33:12have become a kind of a target.
33:14>> Yeah. Yeah.
33:15>> Right. So that might well move and it's
33:17moving also. So I think that is a good
33:19trade broadly speaking.
33:21>> Where are you on the Indian IT debate
33:23that Indian IT companies will they
33:24survive? Will they not? Will they adapt?
33:26>> Good question. My sense is again no I'm
33:30not making a big forecast here. My sense
33:32is and Mr. Chandra Shakhan wrote a very
33:34nice piece yesterday I think business
33:36standard of course he has to write that
33:39as an optimistic perspective because
33:41obviously you know TCS is the ground
33:43jewel. The reality is that
33:46implementation will require Indian IT
33:49services to implement the AI models.
33:52The thing is you will get a compression
33:54of topline. You will not get topline
33:57growth.
33:58>> Margins may well be might hold up
34:01because of the rupee because this year
34:04you know they have kind of managed to
34:06keep their head above water because of
34:08the rupee. If the rupee actually
34:10stabilizes then next year your numbers
34:13may not look that good. So I think it
34:16services and then somebody was telling
34:18me yesterday that the free cash flow
34:19yield used to be 8 9%. I don't know what
34:21it is now, but he's saying now the free
34:23cash flow itself is in some degree of
34:25danger. So, I don't think it's a great
34:28trade. Uh there will be need for them. I
34:30don't think it's going to go away, but
34:32the go-go years are behind them.
34:34>> They'll become utility stocks of the
34:37overall tech ecosystem. Let's put it
34:38this way.
34:39>> That said, I must say this, the there's
34:43a lot of unfair criticism about these
34:45companies. They did not do invest in AI
34:48and we lost the race. So I was telling a
34:51friend that this reminds me of a cricket
34:54match a test cricket match in which
34:56India was supposed to make some 120 runs
34:58and we were about 946 or something and
35:01Kapilv came out to bat and he played a
35:03very rash shot and he got out and that
35:06evening's press conference everybody 1
35:09billion people piled on to him say
35:12you know you should have 30 runs to go
35:14you should have played better this that
35:16he listened to it they say okay now
35:18enough now listen to me boss I'm a fast
35:20bowler. I was never a batsman. Just
35:23because I got some 30 40s here and there
35:25didn't mean I was a batsman.
35:2796.
35:32That's the same analogy I give for
35:33Indian IT services. They set out to do a
35:36body shop model. They did they do that
35:38well or not? Answer is an unequivocal
35:42yes. They transformed India. They did
35:45far better than even they thought they
35:46would. They did far better than what
35:48even we thought. After that you expect
35:51them to again lift to the next
35:52generation. Bring AI model
35:55they'll sit and twiddle their thumbs.
35:56[laughter]
35:56What rubbish is this here?
36:07Algo trading.
36:09>> Yeah,
36:09>> that's that's ridiculous, unfair
36:11criticism.
36:12>> They did their job. They've done a
36:13fabulous job. Their business model is no
36:15longer going to be the same. Accept it.
36:22>> Private startup ecosystem. That's where
36:25family offices are making money.
36:27Startup.
36:29Last I checked was that Mr. Adani had
36:32gone to some startup place where there
36:34were 15 founders.
36:37ride hailing or apparel company. I said
36:40these are not deep tech startups. Boss,
36:43these are not deep tech.
36:45>> Okay. You talked about um power as a
36:48space that you found interesting. Vikas
36:50from Pune has written in uh saying is
36:52there genuinely a boom in the power
36:54sector or is it overhyped?
36:58>> No, I do believe there's a genuine boom
37:00and it's not just an Indian boom. A lot
37:02of the power companies that I know are
37:04also supplying to Europe.
37:06Okay. So, it's a genuine boom. Like I
37:09said, I'm not making a prediction. Five
37:11years from now, it'll be so. But I think
37:12one-year numbers for all of these
37:14companies, I don't want to name them.
37:16There are a lot of MNC's, a lot of
37:17domestic companies. I think that's that
37:19space looks very very good. Even now,
37:22>> that is a good area. Again, like I said,
37:24all the plumbers of the AI boom, there
37:26are quite a few in India.
37:28>> Okay. So, power is one. You would say
37:31your uh wires and cables, your cooling
37:34solutions that those kind of ideas
37:36exactly
37:37>> is what you're saying.
37:37>> Look hard today with AI everybody can go
37:40and find out which are the beneficiaries
37:42of AI in India. We don't have a pure LLM
37:45play but the plumbing plays in my view
37:47are actually much safer.
37:48>> Yeah,
37:49>> because fail plumbing building. So go
37:53for the construction part of the
37:55building rather than the storefronts. I
37:57think India does offer plenty of plays
37:59there. That's where the real money will
38:01be made and it's been made also.
38:03>> You think the story has moved sharply to
38:05small caps and large caps with the nifty
38:08in that?
38:09>> Absolutely. On March 11th, I tweeted uh
38:12saying that in my view the money to be
38:14made in India is going to be uh you know
38:17in small caps and from March 11th if you
38:19see they're all nudging their highs. I
38:21mean the the even just the indexes
38:23stocks have done phenomenally well. I
38:24mean across the board wherever there is
38:27some tech involved there has been a very
38:29very strong move up. I think that is
38:31here to stay. So the nifty looks aging
38:35>> but below that I think there is a
38:38vibrant bull market happening. Now it's
38:40for the viewers to do some hard work
38:42heavy lifting and figure out those
38:43spaces. I've given broad ideas of where
38:45the play is going but there could be
38:46newer plays coming up
38:48>> but we'll see. But my point is it's not
38:50that India may there is no money to be
38:52made. It's just that in this kind of
38:54market the opportunities shrink but they
38:58exist. It's still a fantastically broad
39:00market in terms of choices.
39:02>> Top choice for a lot of um
39:05institutionals when they come out with
39:07their annual notes and their monthly
39:08notes etc. is financials and the big
39:11large private banks. Is that a space
39:12that has ever excited you?
39:14>> Not at all. I mean it has it has excited
39:16me a lot. I mean HDFC Bank has been my
39:18favorite bank for the longest time. Not
39:20as a customer by the way but as an
39:23investor.
39:24>> Yeah. You actually have a question from
39:25Abhishek. View on banks especially HDFC
39:28bank after the recent issue.
39:29>> I'm telling you the questions before
39:30they come.
39:31>> After the recent issues he's added. So
39:33he's added a bit of that as well. All
39:34the
39:35>> No, I don't like the Indian banks.
39:37>> Uh I just think the best years of
39:39banking are behind us. If you look at
39:42the whole lending spectrum,
39:45uh MSME is where they intend to grow.
39:48But in my view that's the riskiest part
39:49of the whole whole spectrum apart from
39:51the unsecured loans on the consumer
39:54side. I just don't see where the play is
39:56there. So I would steer very clear of
39:59financials in
40:01>> including NBFCs
40:02>> including NBC
40:03>> capital market plays
40:04>> capital market I don't like.
40:06>> I think again the best years are behind
40:07them.
40:09I'm just saying forget about this. So in
40:11China they have a very nice term for
40:13this
40:14>> right from Xiinping. He calls these
40:17businesses fictitious businesses.
40:20>> What do you mean fictitious?
40:22>> What are what rubbish financials and
40:24AMC's and wealth managers? China can't
40:26become a superpower based on these. We
40:28need hardcore tech company which is why
40:31they have progressed so much the last 10
40:3212 years. I still think that is there is
40:35a merit there is a grain of truth in
40:37that. All these businesses are bull
40:39market businesses. We don't have one.
40:41Forget about them. They're yesterday's
40:42trades. Move on. In life you need to
40:45move on.
40:47>> Okay, let's move on to the next
40:49question. Nimit and Punit, Punit both
40:51have questions. Let's take them one by
40:52one al together.
40:53>> Hi Shankar. U so just to question you a
40:57little bit. You said the big boys the
40:59market should be left to the big boys. I
41:01put to you that in difficult times uh
41:04the big boys are often the first to exit
41:06the market and it's the domestic cushion
41:08that we have now that keeps the market
41:10from tanking. uh and retail and and
41:13there are studies to show that long-term
41:14retail
41:15>> you can also call instead of cushion you
41:16can call it a punching bag
41:18>> either ways there is a bag between it's
41:20a fine line right there is a bag
41:22>> they're taking punches they become a
41:23punching bag
41:24>> fair the there is a bag between the face
41:26and the punch but in any case long-term
41:29retail investment in India even if you
41:31look historically over the last 20 years
41:33it has worked second point is you look
41:36you you say that right now retail
41:38investment has become too much fair it
41:40has become too much but the problem that
41:43the solution that you give is that
41:44retail investors what's the question
41:46what's the question the question is I I
41:47don't think that it is a problem that
41:48retail investors should stop maybe
41:50long-term investment needs to be
41:51investivi incentivized more it's not
41:54that retail investment needs to stop
41:56right so
41:57>> that seems outlandish because it has
41:59helped us in
41:59>> so your question is why are you saying
42:01what you're saying is that your question
42:02>> and fi seem to run away as well in tough
42:05times
42:06>> so it's good no
42:07>> so then there
42:08>> why are you giving them the dollars to
42:10exit it back in the day when I was
42:12active on the sales side running a
42:14institutional broking house. We never
42:16had retail money coming into bail out fi
42:19f I want to sell five lakh shares of
42:21bajay auto is used to say boss then do
42:23one thing manatan may next office this
42:25guy is buying call him up and give him a
42:27good story he would call his friend up
42:29they all stab each other in the back and
42:31the friend would then place an order and
42:32this guy would sell to dollar to dollar
42:36and dollar has gone out that's the right
42:38way to do this if India starts to fund
42:40exits at the scale it is doing we don't
42:43have the cash long story thought
42:47what you're saying is right, but what is
42:49the solution? You have $550, $600
42:51billion left. You're hammeraaging half a
42:54billion dollars a day.
42:56Please think about that. Can we afford a
42:58currency crisis? If I have a choice, I
43:00would rather afford a stock market
43:02crisis. They they they almost always
43:05come back. But currencies rarely recover
43:07to the pre-crisis levels. Look at the
43:09history of currencies.
43:11You'll have only hardly any examples
43:13that currencies after a big collapse
43:15recovered all the losses and then went
43:17up. It doesn't happen.
43:19>> Okay, we have a few minutes left. I'm
43:21going to give Vasha a question and Punit
43:23a question. Ladies first. Punit, let's
43:24go with Vasha.
43:25>> Hi sir. So you've been bearish on Indian
43:27markets and that has
43:28>> No, I am not bearish. I'm bearish.
43:30[laughter]
43:31>> I am hairish. I've been bearish on the
43:34nifty but I just said it from March.
43:36I've been very bullish on small caps.
43:38>> I just wanted to uh understand. So
43:40you've been I would say bullish on power
43:42and it what about healthcare? You know
43:46no ge uh uh middle east crisis would
43:48impact the diagnostics or hospital
43:51companies when it comes to India. So
43:53just wanted to understand what is your
43:54view when it comes to the overall
43:55healthcare.
43:56>> So healthcare is a very wide space. I
43:58mean I don't know what you're talking
44:00about
44:00>> hospitals, diagnostics and of course
44:01pharma companies.
44:03>> So I mean a lot of the traffic was
44:04coming from the Middle East also in
44:06terms of medical tourism. Domestically,
44:08of course, we know that these these are
44:11fairly structural industries. Whether
44:13you'll make a lot of money buying them
44:15now,
44:16>> I'm not a believer in that camp. If you
44:18say 10 years from now, maybe. But
44:21remember one more thing very important.
44:23Most of our healthare especially the
44:25hospitals are now also owned by the
44:28private equity funds.
44:29>> So if there is a bull market, they will
44:31sell and again the dollars will flow
44:32out. Please don't forget this important
44:35fact.
44:39Please. Now that is a genuine factor
44:40which is what I said the mega IPO should
44:43be deferred
44:44[laughter] mega we have headlines after
44:47headlines from this town hall. Punit
44:48very quickly we have 3 minutes left.
44:50>> Yes sir. Just one quick question because
44:51you spoke about IT and banking but do
44:53you feel that there are some dinosaurs
44:56currently in the nifty50 and we need to
44:58change some way in terms of regulation
45:00that position of nifty50 so that you can
45:02see the exposure and the second one and
45:04sorry to interrupt but you said small
45:06caps continuing and tech being a factor.
45:09So do you feel that spaces like the mid
45:11and small cap, healthcare, auto
45:13components, defense are some of the
45:15plays that you like or do you feel some
45:17have run up quite a bit?
45:19>> Time for his answer also.
45:20>> Yes, [laughter]
45:21defense has run up a lot. I'm I'm not a
45:23big believer. There are good defense
45:25plays. I've bought a couple recently.
45:27They're more reasonably valued. Uh as
45:29far as Nifty's composition is concerned,
45:32I think the index committees are there
45:34and they keep taking out old companies,
45:36bringing out the new. That's a matter of
45:37process. it'll it'll happen which is why
45:39you had Zomatoes entering and I think
45:41JSW exited or something like that. So
45:43the natural process here it will happen
45:46over a period of time but before that
45:48happens we can't keep waiting we have to
45:50go under the surface of the nifty pick
45:51up the winners and I've given you a
45:53decent basket to choose from that all
45:56things relating to infrastructure spends
45:59on AI there are good good plays in India
46:02>> you can fill up a decent portfolio with
46:04that much capital
46:06>> what in the consumption story do you
46:08think is relatively undiscovered when I
46:10say consumption basket okay why didn't
46:12autos those OEMs, ancillaries, then you
46:15have uh FMCG, you have the entire
46:18consumption.
46:19>> No, auto ancillaries have looked good.
46:20I've got a couple
46:22>> uh autos I know they're doing very well.
46:24I mean, we know the numbers. I think
46:26they're big beneficial. Probably the
46:28biggest beneficiary of the GST cuts.
46:30>> I don't think any other sector has
46:32benefited as much as autos have. Uh but
46:35I it's just out of my radar for now. I
46:39look at companies which will be more
46:40plumbers rather than the brand owners.
46:42So even in autos you have ancillaries
46:45which are doing well. I mean there are a
46:46couple of very interesting plays out
46:48there
46:49>> smaller companies but they look they
46:50look very very good.
46:51>> One closing comment before uh we wrap
46:54up. Do you see the situation as we are
46:56in now for Indian market say for the
46:58next 6 months if I were looking at
46:59December 2026 as improving from here
47:02staying the same or potentially
47:03worsening? I think Nifty might be lower
47:06>> and small cash will be higher.
47:08>> That's my clear view.
47:11>> Wow. So that's that's clear and precise.
47:13Thank you so much Anker for coming in
47:15taking all of our questions. Okay, we
47:17have a little clap from the audience and
47:19over here our team much. You guys are
47:21just babies here. [laughter]
47:24>> Well, thank you. Thank you for taking
47:26all of our questions. Great to have you
47:28here. That's all the time we have on
47:29this town hall. Tell us what you think
47:32and what you would like to ask our next
47:34week's speaker on the show. Thank you
47:35for joining.
47:42>> [music]

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