SBI Mutual Fund’s Jayesh Shroff in a chat with ET Now this morning explained that he still doesn’t feel that the markets have reached a bubble stage. His fund is very aggressive on the domestic consumption space and within infrastructure on the power space.
Do you believe that markets are fairly valued and that it was time to start booking just that little bit of profit?
The market is still trending up and in any trending market, market would usually trade above the fair valuation zone. So, the market never trades at equilibrium. On the upside it will always trade above the fair value and on the downside it will trade below the fair value. I think it is normal maybe and another thing that I feel is that the analyst community is behind the curve in terms of upgrades and we will see maybe few upgrades coming in post the results that will be declared this month and to that extent may provide a further fillip to the market.
Is there hint of a liquidity led bubble in the Indian markets, do you think that is a possibility at all?
It could be a possibility but it is just not a possibility in a very-very near future. So I think we still can’t say that we have reached a bubble stage and where you need to worry too much about excessive flow of money into the equity markets either from the domestic or overseas investors.
What could be the spaces that investors could look out for say maybe the next three to six-month time frame?
We as a fund house are extremely bullish on the domestic consumption space and maybe that would include food and food products, entertainment and so on. That is one space or one theme that we are playing very aggressively and I am also playing it in the funds that I manage very aggressively.
The entire cement exposure of the BK Birla Group eventually at some point in the future might actually be consolidated into one company. Do you think that is a potential possibility in the future and would you be positioning your own portfolios to see some value unlocking, value building when that eventually happens?
The promoter group has that decision to take and we do not have any clues to that. I think stock specific we would generally not discuss, but, in this case it is a diversified company which offers value in lot of the businesses it has apart from the real estate that it has, so I think for us and sum of parts make more sense. We have never looked at whether the cement business is going to get merged with some other company or not.
In the last one month have you been sellers in Indian equities?
No, we have not been sellers in Indian equities and at the best we would have actually deployed money because of the inflows that we would have received and I think the market is as I said earlier is trending up and would likely to, I mean is likely to remain buoyant for maybe at least in the extreme short term.
No, we have not been sellers in Indian equities and at the best we would have actually deployed money because of the inflows that we would have received and I think the market is as I said earlier is trending up and would likely to, I mean is likely to remain buoyant for maybe at least in the extreme short term.
Your portfolio seems to have a positive bias towards the capital goods space based on the top ten holdings. What are the views on that space and the current valuations?
With the kind of demographic change that the country is going through and will continue to go through over next 15-20 years, the future of Indian economy and to that of extent Indian equities is extremely bright. Within that, as I said, the best play on of course this demographic change is the domestic consumption sector and that is what we are playing aggressively at this point in time. However, India is an extremely deficient country as far as infrastructure and the basic infrastructure is concerned and to that extent there is immense opportunity for players in that space to actually grow and expand.
Growth of 8% plus you are talking for a foreseeable future is not possible without development of world class infrastructure and the government definitely does not have resources and the capabilities to develop all kinds of infrastructure. So in India you have seen over the past two or three years that PPP that is the public private partnership has become a norm and has been very-very successfully implemented in lot of sectors which is a huge opportunity for infra place. Capital goods of course is one of the largest segment within the overall infra theme and primarily what we are playing here is the power sector.
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