Sudeep Bandyopadhyay, Director and CEO, Reliance Money, said there is no fresh money coming in from retail investors. "There is more of a churn happening. Mutual funds are getting fresh money while direct participation is less."
Bandyopadhyay is bullish on sectors like power, infrastructure, construction, education, and shipbuilding.
He said HNIs are partly bullish. "There are some HNIs who are still on the sidelines. The last few IPOs have seen huge interest from retail and HNIs."
Excerpts from CNBC-TV18’s exclusive interview with Sudeep Bandyopadhyay:
Q: What is the national retail sentiment like at this point in time with the midcap action?
A: The sentiment is extremely good. They are very bullish. We are advising retail to get into the market and not try and time the market because the secular growth story in India is not affected by all the happenings in the US. As a country, we are fortunate to be the most insulated from the happenings of the US and other developed countries.
Retail participants should come into the market without any fear. Instead of trying to time the market, they should remain in the market for sometime. If somebody has a 3-5 year time horizon in mind and picks up a right sector, I don’t think there is anything to worry about.
Q: Do you sense any kind of hesitation around this 20,000 kind of level with HNIs or retail clients, or are they not looking at those levels very closely?
A: Instead of trying to time the market, investors should select the right sector, and remain invested for 3-5 years. Retail investors should be educated on how to be patient in the market. Historically, we have seen that whenever there is some panic, they exit at the first instance and stay away from the market when really they should be in the market.
That culture needs to change. We are trying to convince investors that just as they invest in debt, national saving certificate, post office, or an RBI bond and don’t look at it every morning and evening, they should do the same for equities. They should select a good stock in a good sector and remain invested for 3-5 years.
Q: What is happening by way of retail money participation, are people committing fresh cash or is money being churned from a largecap position to a midcap or smallcap position?
A: I don’t think fresh money is coming in from retail at this point of time, there is more of churn which is happening. There is some amount of money coming into mutual funds as of now. For the last few days, we have been seeing mutual funds getting a lot of fresh money. We are seeing very little money coming directly into the market from retail at this stage.
Q: I believe you like power as a sector at Reliance Money. What leg of it do you like? Have you been booking profits or are you still invested in the story?
A: We believe in the power story. Besides power, we like infrastructure, construction, education and shipbuilding. We are advising our clients to invest in these areas because these are growth sectors. In the next foreseeable future, they will produce more than proportionate returns.
Apart from power, telecom is also another good sector,. Education is a huge area of interest for the entire economy. If you really look at how much we spend on education as a country, it is very little. That is going to change as there is a conscious policy taken by the Centre to spend more and more on education.
We will shortly see benefits coming to a few players in this sector.
Q: What is the feeling that you get from HNIs, are they skeptical about market valuations and the upmove from here, or are they participating in a big way in the last 1,000-points or so?
A: There are actually two segments. Some people are booking profits and probably waiting a bit before entering. There is one more segment which is extremely bullish. They are making fresh investments in the recommended sectors.
Q: Are you comfortable with the 30-40% kind of daily upmoves that we have been seeing for stocks in the last fortnight? Do you see any kind of excesses playing out on the screen?
A: When we advise clients and look at the markets, we really take a medium to long-term view. For intra-day, we have a segment. We have research which does advise on intra-day activities. But it is not an area where we focus too much on. We do not advise our clients on an intra-day basis too much.
On whether I am comfortable with the 800 points upward movement or the 400-500 points downward movement, it is not a very acceptable or desirable movement trend.
When we are integrated with the global economy, these kinds of factors are definitely going to be there. We better get used to these things.
Since there is no concern in the medium- to long-term, investors should not get scared. Short-term players and day-traders need to be very cautious.
Q: How actively are you tracking and recommending primary market offerings right now? What are you seeing by way of HNI and retail interest there?
A: There is an amazing level of interest. Last few issues have seen huge interest. In Mundra, there was huge retail interest. We are also seeing a lot of interest in the Edelweiss issue. We track the primary market very closely. We have a very active desk and are getting a lot of interest from HNIs and retail.
Q: Do you see a lot of interest in retail to take delivery of stocks or is there interest moving slowly to the stock futures space now?
A: Small investors are not getting into stock futures in a big manner. HNIs are into stock futures in a big way while real retail is into delivery-based trading
Source: Moneycontrol.com
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