Jiten Doshi, co-founder and CIO of Enam AMC, says that unlike most markets in the world, India is blessed with proactive regulators in sectors such as insurance, capital markets and banking.
In an interview with mint genieDoshi believes that simultaneous uncertainties regarding global environmental politics and asset class volatility could build up to lead to a rare period in which nearly every asset class (equities, bonds, real estate, gold) can participate from a returns perspective. He said there is.
Edited excerpt:
What is your overall view on the Indian stock market? Which sectors do you think will be bullish and which sectors will be bearish in the long run?
We are eternal bulls on Indian stocks. India ended 2023 on a strong note with Nifty earning 20% of her return and marking its 8th consecutive year of positive closing prices. Over the long term, India remains one of the top performing markets with a 3-year, 5-year and 10-year revenue CAGR of 16%/15%/13%.
We support multi-year growth of the Indian economy through democracy (law of the land), demographics (size, diversity), digitalization (DPI, G2C, etc.), development (soft & hard infrastructure, policy and implementation). Create a runway. We believe that megatrends such as premiumization, digital money, financialization, industry consolidation, formalization, urbanization, healthcare, import substitution, manufacturing renaissance, and once-in-a-century capital investment generation will occur during this period. I expect it to expand. This makes segments such as aspirational consumption, consumer discretionary (consumer durables, mobility, retail, QSR, etc.), home improvement, BFSI, capex, and healthcare interesting investments from a long-term perspective.
In which sectors do you foresee investment opportunities for HNIs and UHNIs in the stock market?
Any investment must serve three core objectives: return, risk, and duration. All investors (big and small) need to sort this out before they start exploring opportunities. If we look at HNIs as a class, each of these counts gives us different tiers of investors. As a category, these investors tend to hold for the long term and take on higher risks than the average investor. For this group of investors, intensive long-term investments with low redemption rates are a more suitable style. As it stands, this narrative suggests that inflation may ease and the interest rate cycle turn into his 2HCY24E. The simultaneous occurrence of global environmental political uncertainty and asset class volatility could lead to a rare period in which almost all asset classes (equities, bonds, real estate, gold) can participate from a returns perspective.
Looking at the current market scenario, what do you think about the appropriate asset mix for active and passive investments today?
Unlike most markets in the world, India is blessed with proactive regulators in sectors such as insurance, capital markets, and banking. Regulation is removing friction, increasing transparency and delivering better benefits to end users/beneficiaries. India offers active and passive opportunities to equity investors with the world's best TER structure. An overwhelming pedigree supporter of direct investing and stocks, we continue to champion focused, long-term, low-churn investing as a proven path to generational wealth creation.
Given the growing contrast between FII and DII flows, how can we read the trends for Indian investors?
When it comes to capital markets, India is in a pole position from an architecture, technology, regulation and risk management perspective. In addition to this, it is extremely large and has the most balanced structure in terms of number of participants, sector breadth and disclosure standards.
Money seeks asset classes with better prospects, better visibility, relative opportunity, and recency bias on asset performance. Global investors are slowly waking up to the reality that India's opportunity is long-term and are proactively shifting their incremental emerging market exposure. FII turned into a buyer in his CY23 with an inflow of $21.4 billion (in CY22 he had an outflow of $17 billion).
Increased retail participation, higher SIP flows and higher allocations from pensions and insurance outweighed FII flows. The supertrend of financialization and digitalization (increasing penetration rates, growing interest in retail, next-generation investments, sustained market vitality, and increased financial literacy).
Since then, this corporate giant has negated the heavy dependence of stock market performance on FII flows. One can only imagine what will happen to the stock market if a buying panic starts in this segment. Indian equities are an essential asset class in an economy that is entering a new decade and where the median working age population is below 27 years.
Given that it is an election year, is India's growth story intact? How do you feel about global emotions?
A fair reality check reflects a changing world. It is changing slowly, steadily, and permanently. Gone are the days when it was easy to make money. Capital is more expensive. The world is divided by disrupted supply chains, socio-economic rifts, escalating conflicts and deep polarization. Existing economic frameworks, capital market rule sets, and global powers are under challenge. These decades-long changes take years, are gradual and slow, and are prone to persistent instability where the established and new orders are at a crossroads. Established templates, formulas, and equations may not work at this stage. During this period, most asset classes (currencies, commodities, capital) are expected to exhibit sustained volatility. Amid all this uncertainty, shelters that provide stability, visibility, and growth are rarely found in one place.
Regarding election effects, the current market rally has further expanded positivism about the favorable outcome of recent state elections for the national establishment. As a result, markets appear to be pricing in the most favorable economic, political, and corporate performance scenarios, including the possibility of policy continuation, acceleration of the next generation of post-election reforms, and sustained higher quality and consistent earnings trajectory. It looks like Although this carries the risk of eroding the margin of safety to some extent, positive surprises from higher-than-expected government spending, higher FPI flows on the back of better allocation, and signs of rural revival (on a weak basis) are expected in the medium term. It's basically the same balance.
Corporate earnings growth in FY24 was mainly driven by the domestic sector, with strong double-digit growth. Which sectors will continue to see this growth? And are there any areas of caution?
India is an oasis in a world where growth has been delayed. Its size, backed by multiple sizable cohorts, makes it a multi-segment market. Economic performance has been primarily driven by consumption. 2023 saw broad-based growth, with all indexes and sectors delivering positive returns. The rally was led by a recovery in sectors that have underperformed over the past decade, including real estate, capital goods, PSUs, industrial products and defence. As mentioned earlier, sectors such as financials, ambitious consumption, industrials, consumer spending, capital goods, real estate, and infrastructure remain eager to participate this year. Export-related businesses will be partially affected until global growth recovers.
Given the current global economic situation, how has the company adjusted its investment strategy to navigate uncertainties and take advantage of new opportunities?
Like life, investing is a continuous learning process. People need to reinvent themselves to changing realities and learn from their mistakes. As mentioned earlier, we live in a world where the only constant is uncertainty with wild fluctuations. The unknown unknowns expanded exponentially. Therefore, noise is the dominant reality in the market. Our investment philosophy relies on his three friends: business, price and time. We reinvented our internal framework to go deeper into understanding the business and assessing a fair margin of safety. We've further strengthened our focus on digging deep to help reduce the pain of value and time and create the time to partner with you to make the right position sizing decisions.
Given the ongoing climate crisis, what role does sustainability play in your investment decisions and how are you incorporating environmental, social and governance (ESG) factors into your portfolio management approach?
We truly believe that corporate value depends on how well a company treats all stakeholders, including employees, society and the environment. As a Group, and particularly at AMC, we are pioneers in the implementation of socially responsible investing and have been early adopters of ESG and PRI standards into our business processes. We have an in-house ESG research team dedicated to this purpose. This specialized ESG vertical delves deep into both valuation and engagement, effectively layering his ESG into the investment process. Although still in its infancy, regulatory advances, improved disclosures, and dedicated capabilities within companies are making it possible to leverage publicly shared data points to create unique models. Ta.
Given uncertainty, how important is portfolio diversification for investors and what strategies do you recommend to increase portfolio resilience?
We are bottom-up stock pickers who seek to create opportunities that can generate multi-year returns. Resilience comes from buying the right business at the right price. Long-term profits are a slave to business economics and the price you pay. Our central operatives are focused on investing in fewer people, digging deeper, and staying longer.
Our core investment philosophies are compound interest (long-term profit growth), focus (few good businesses), deep work (intensive involvement), mean reversion (respecting cycles), and risk management (perpetual It is based on five pillars: avoidance of capital loss. Decision-making is done by humans, but a set process guide helps keep you away from distractions to pick the signal from the noise of each doctrine. We believe in intensive diversification. Diversification is the result of concentrated effort (rather than lack of effort). Staying focused on absolute long-term performance at the expense of comparison (which can be a distraction) is the key to building long-term outperformance.
Here is a comprehensive three-minute summary of what Finance Minister Nirmala Sitharaman said in her budget speech: Click to download!
