Excerpts from podcast posted on NBT GOLD
In conversation with Mr. Sameer Rastogi (Director, Saksham Wealth P. Ltd.) on market outlook.
NBT: Madras high court has given an order to issue Bumper to Bumper policies at every car purchase. Do you think it will impact automobile industry or insurance, adversely?
Sameer: Actually, no one would be hit. Car buyers won’t mind paying the extra small premium. Most buyers would be financing the cars. All these costs can be built in the car cost, depending upon the Car finance companies. Insurance companies would actually get more business.
NBT: Export sector has delivered outstanding performance. Recently RBI Governor, as well as Finance Minister have highlighted this sector a lot. Do you think this sector has a big role to play in stock markets?
Sameer: Recently, JP Morgan report also suggested that India’s exports are poised to do well. India’s export basket has changed from gems, jewelry and commodities, to …. software, pharma, engineered products, mobile phones and automobile. These are high value add exports. As of today, 20% of India’s GDP is though exports. Government is providing good support to manufactured exports. China plus one outlook in the world is a good opportunity for India. Exports driven companies are likely to do well in the stock market.
NBT: Moody’s has highlight asset quality risk in Indian banking. Do you think the forthcoming festive season shall ease the pain in banking? How much could be the hit that the banks will have to bear in their asset book?
Sameer: There are 3 categories of Banking / Finance institutions:
- Corporate lending : These look safe. Most of the loss is already in the books
- Retailing lending Banks : May suffer 5% to 7% of their asset book.
- Retail lending NBFC: May suffer 5% to 12% of their asset book.
Forthcoming festival season can reduce the pain marginally, but it will be bit too less.
NBT : For now, there are two main risk factors in the market : Inflation and Tapering. Do you see any other concern playing out?
Sameer: The noise of tapering is growing day by day. FED and RBI have given indirect indications that interest rates cannot remain low forever. Tapering itself may not shock the market. However, more than expected tapering can cause disturbance. Central Banks would be cautious to increase interest rates as it is not a magic bullet to control inflation directly. Rather, it can hamper recovery. There can be shock from Afghanistan … or sudden dip in profit margin … or sudden dip in demand … or any other variation of COVID….anything could prove to be a risk. Difficult to forecast which one would play out.
NBT: The way Indian markets are performing, do you see a big correction if Tapering was to happen?
Sameer : Extent of tapering would matter….sharp tapering…yes, market would get shocked. If it is mild, then markets will take it in the stride. It is the unknown that hurts. Mild tapering is already accounted for.
NBT: Jackson Hole Symposium is beginning today. The economists from around the world are getting hooked on. What are your expectations?
Sameer: FED has not given any agenda yet, The FED Chiefs would need to debate about the affect of easy money on inflation vs affect on employment and recovery. They will take into consideration the spread of DELTA variant of COVID. They will discuss whether the inflation is transitionary or long term.…and possibly some more. My expectation is that FED is likely to continue with easy liquidity and accommodative stance.
NBT: With new DRONE policy in place, and stock that is in your mind?
Sameer: One company that comes to my mind is ZEN Technologies. I don’t think there is any other manufacturer of drone listed in India But yes, it is going to be a big area for new players to pitch in. Also, it will have direct / indirect impact on India’s telecommunication, logistics, agriculture , and defence.
NBT: Adani group has performed well on the stock markets over last week. What are your hopes with Adani Ports?
Sameer: After approval of its intent to invest in Andhra Pradesh port, the share price has already risen. I think Adani port is a good long term call. If India’s exports have to do well, ports have a big role to play. That will help Adani ports for sure.