Road Ahead Markets Risks Opportunities Mirae Asset Mutual Fund

Hello everyone. Good afternoon and thank you for joining in today for our monthly webinar. The last few months have been very interesting as markets continue a volatile ride and every day’s news flow changes market sentiments. The last few months have been also very interesting. As Indian investors, we’ve been used to a phase where Indian economy has always gone from strength to strength where you know we moved from the sixth largest economy to the fifth largest to the fourth largest etc. But in the last one or two years, a lot of things have changed and India has slipped from the fourth largest economy to the sixth largest economy. And even on market cap, countries like Taiwan and Korea have overtaken India. In this very interesting times, we would want to try and decipher how you should make your investments, you know, stronger and how you can make your investments more efficient. We have a team of experts to try and decode the world of investments for you. I’m very pleased to introduce our first speaker for today, Mr. Gorov Mishra. Gorov Mishra is head of equity and he’s been with the organization for more than eight years and manages our large cap and focus funds. He will help decipher the outlook on equity markets for us. So, welcome Gorov and uh thanks for joining in today. been very interesting times in the last few months. So I have a list of questions which a lot of investors do ask from us and we would like you to sort of help address some of the queries that they have. Let me start with the first ones uh that you know we’ve been seeing that in spite of u the news that geopolitical risks have sort of come down there is a ceasefire going on FPIs have sold more than $40 billion in Indian equities over the last 18 months and the rupee continues to depreciate versus the dollar. uh recently we had the news flow that the US administration has indicated to again increase tariff on India and some other countries. What are the key headwinds that we should watch out for the near term?

Yeah. Uh so first of all good afternoon to all our uh listeners. So um sure I mean your observation is absolutely bang on. um there’s been lots of um headwinds and they don’t seem to kind of be uh receding anytime soon and I think uh I think it will be better for us um as managers and for investors to assume that this world uh that we are seeing these days is more or less the way it is going to you know continue in the future. So first of all um you know on the international side um in terms of the news flow whether it’s on in the Middle East or the tariffs um I think we have to acknowledge that there there is this undercurrent of geopolitical up one you know uh uh you know pressures and you know amongst major countries and then a lot of other smaller countries and regional countries are getting involved in that you know kind of big power again and therefore uh in some manner or the other we will one should expect that you know whichever country can at a point will try to use whatever leverage through some choke point. So you know besides tariff at some point it was rare earth metal it could be some other such supply from you know in this case China or some other thing which they control you know have a control of on a global basis or you know more recently uh Iran through the state of Homo. we’ll see this continual sort of events unfolding. I would say that it’s become the base case. Correct. But really to your question of what we should be concerned with your question was more towards the short term. So I’ll caveat that by saying first for medium and especially for equity as an asset class one should be looking at with the long-term horizon and all these you know kind of volatilities on account of uh what we are seeing should be looked at uh with that mindset and probably constructively especially if market and valuations come down but so in the short term clearly on the international side I can think of two you know challenges which could you know reinforce Um one is um can uh first one is of course this you know state of almost the Iran versus US thing. Um the longer it continues there is going to be greater repercussion um to you know emerging countries like India whether it’s through inflation you know crude oil orans supply side unavailability of certain raw materials etc u and and and even maybe some demand destruction. So clearly the longevity of this crisis is going to have a bearing and that’s something to be looked out for. Um then the second thing is probably on an international basis is u you know just the valuations of some of the markets in rest of the world the US and all those uh countries which are participating in the AI trade. One could argue that they’re kind of at the upper end of their own range. they could continue like this for who knows you know many few years sure but if there was if there was to be some consolidation correction uh it would spread across capital markets though I would again say that India should be considered as a good quality anti-AI trade so you know while there might be some short-term but I think not beyond that because we not really participate so those are two one or two international clues but uh you know which could uh be something to watch out for especially the sization of hostilities in the release in the domestic space. Since we last spoke, what has been another sort of uh additional um news flow of worry uh is besides the inflationary you know impact of the Middle East crisis is the the the the monsoons falling short and that degree of you know that magnitude of shortfall seems to be increasing. So from you know 7 5% now it’s down to 10%. 10%. Yeah. So you know again um it’s just something to be watched out for because there are lots of um you know variables there. It can lead to weakness in rural demand which otherwise was has been looking up in recent times. It could lead to slightly additional pressure on inflation. Having said that you know whether it’s water reservoir levels whether it is buffer food stock with the government of India and even you know prior instances of uh you know deficits monsoon deficits elino related uh the country has been increasingly able to manage it better each time simply because the economy is diversified more the uh the the significance and salience of agriculture has been diminishing over the years so this time if even if there’s a one monsoon failure I think it’ll rock the boat too much. And so those were some of the two three you know things to watch out for. But again I would say for investors uh look at this asset class with a longer horizon. I think that story is is is is very much intact. Sure. Maybe Gorav I started with the negative question first. Usually people ask what could go wrong because we always start with the positives but nowadays the news for all negatively sounds much stronger. So maybe the caveat was at the start. See in the long term Goro we keep saying uh markets are a slave of earnings and if earnings growth sort of remains robust markets in the long term will sort of come back to mean uh as well and be able to attract flows as well since you know the Q4 FI26 earnings is through to a large extent. What do you think have been the earnings hits and misses and what is the outlook for earnings going forward? You know that’s a important question especially the last part of on the outlook uh because clearly we’ve had you know a couple of years where Indian uh corporate earnings have not really delivered um you know especially for the you know the the main headline index the large index the large cap you know it’s not it’s been sub 10%. Sure. Yeah. U and uh that’s added to FI flows not really coming into a market where earnings growth has been a bit lackluster whereas you know you’ve got maybe other higher growth the other growth yes sectors in other countries. Yes. Um but uh so yeah to your question in the various parts first of all the earning season itself uh was fine really u I more or less the usual range within third one/ird of the companies gave numbers which were slightly below below expectation there was 2/3 the larger chunk which was in line and ahead of expectations uh for the quarter gone by uh if you to think of it for the large cap the top 100 top line and earnings growth would have been in that double digit you know 10 12% range and the revenue and the earnings level for the mid and the small it became even stronger especially for the midcap you know the revenue growth was uh you know more mid- teens and the earnings was uh you know higher than 20 around that 20 25% similarly for small cap mid- teens revenue and towards 20% earnings growth so it was broadly in line sure uh and uh frankly um there yeah I mean in terms of the big sectors or the bigger companies the misses were just you know say the pharma sector it was known there there was some you know pent there was some base which was there last year some molecules which were not there so that caused most of them to you know deliver sharper drops than what was expected and maybe some you know some big conglomerates like reliance but otherwise the others metals and across others banks in line with expectations uh so that was just a flavor of uh you know how the quarter gone by was uh but you know we should also think of the earnings going forward in terms of two cont counterveailing forces. Uh the one is of course as the quarter has gone by uh and conclude con concluded earnings cuts have not been too deep at this point. So they’ve just been within a percentage point cut for across these cohorts. Correct. Which means that say for the large cap we’re looking at we are looking at a 15 to 16% we are broadly there you know maybe 14 and a half 15 thereabouts at this stage. Correct. And but the outlook is very very nebulous and it’ll depend on that first question on how long this Gulf crisis because that will have a bearing on how much elevated how for how long the crude prices are and therefore the impact on margins if there’s any impact on demand because corporates will try to pass on some of the you know raw material pressures that whole cycle could uh worsen. uh conversely if this uh you know the this Middle East event were to kind of settle sooner rather than later it could be not too much of a pain. Uh so right now the cuts have been minimal but if you recolct last time we did mention that otherwise historical you know analysis suggests that for a 20 percentage point increase in crude if $70 was the initial base you know before the war began and if we had to assume that it’s going to be at 85 for the full year uh then the hit to earnings would have been 150 basis points. So if we’re thinking of a one 16 percentage then we would be down to 14 and a half which was which would still be manageable. We have to see where you know this for the full year where crude settles. Correct. We are you know right now today the I mean the RBI itself raised their crude assumptions. I think they’ve been conservative and it’s still really early days you know uh yet we’re two months into the year where crude might have averaged the Indian basket maybe around 100 105 or thereabouts. Um so you know the coming months will therefore be important. So that will be on a top down but again on a bottom as I said that one the first quarter will see the actual hit and people will then start calibrating uh numbers but depending on how the background is it might not be so severe for the full year and uh yeah that and then lastly I’ll just make a point that um this is an irritant which could become a bigger problem but otherwise as the quarter concluded and even besides the quarter At least the highfrequency data coming out you know was all suggest is all suggesting that growth uh across sectors has been picking up. So we were discussing last time the banking cycle the credit cycle asset quality all have you know picked up further in the last couple of months. Credit growth from that you know sub 10 to 12 now it’s you know moving towards that 14 16% and it’s be becoming more broad-based across you know all retail uh industrial credit all of that. um and asset quality in the results season from all the banks and the non-banking sector have have they’ve repeated that they see to be very much you know benign as things stand and despite this two months of war already underway so that is there similar in the real estate side a big part of the sort of economy with linkages you know the at least for the organized corporate sector uh their sales uh and what they’re talking about for next year in terms of the growth is pretty uh robust you know very very robust. uh so while it might not be the peak of the real estate cycle but this cycle could continue if you know they keep their pricing under sort of reasonable levels and then automobiles another you know another big part of the manufacturing we’ve seen good volumes continue post the correct uh the GST cuts and they still are you know more or less continuing you know maybe CVS there’s some weakness but so so I mean similarly when we heard companies across other even in the capital you capital expenditure side related to power TND um you know data center related all those sort of sectors and the outlook has been robust. So this earnings hit right if it has to come will be because of this uh the pain from the Middle East not because there is some underlying weakness in the system. So if you go back you know postcoid also uh postcoid and then post the Ukraine war uh you know corporates had to raise prices as you know all the raw materials had shot up but that time the underlying demand was weak because of the covid impact on households household balance sheets. So you know then that led to huge demand uh destruction or demand really not coming. So they raised prices but so for one year you know they got marginled growth but without any volume kicking in eventually. Correct. This time around because of the government’s uh support last year you know both on the monetary side and the fiscal side we are you know we’ve been very hopeful that there’s genuine you know demand pick up and all indicators are pointing except now we have to deal that’s a long answer. No thanks thanks and I think I’m hoping that investors get the perspective that see in markets we have to only look at controllables and uh maybe from a corporate perspective they can only control the way that they run the business. geopolitical risk like you mentioned rightly will continue and uh can continue in different forms. Uh sort of another thing that uh Gorovi wanted to look at is on a year-to-day basis large caps have sort of taken a more than a 10% decline while mid and small caps have been flat to mildly positive in the current environment. How should investors make their investments with a 3 to 5 year perspective? Sure. Now um here of course we know the flows that you know earlier comment as well that there has been huge outflows from India correct in March itself we saw you know 14.5 billion dollar outflow while that has sequentially been moderating a bit so it fell down to 5 and a half and this the month ended we would be closer to five or four and a half. So it’s been moderating but it’s still these are large amounts and typically outflows have been happening you know in the larger cap name. Yeah. Yeah. What you can sell. Yeah. what you can sell, what you’ve owned earlier and so that’s having that impact on on the large caps more and then we know domestic money has been coming in terms of proportion mostly in the small and the midcap cohorts so that’s supporting that category but to your question on you know with a 3 five year um I I would say that in any portfolio there’s a relevance for each of these se each of these cohorts because u you know there are different industries which are captured most appropriately with different uh within different market caps. Sure as you might imagine you know metals the big metal place if one wants to participate or the utilities the bigger banking you know system uh whether it’s the the private banks uh even the PSU bank they they all caught they all captured to the large cap correct but then if you’re looking at smaller industries then the biggest firm within that industry or that industry market cap itself would you know make it fall either in the in the midcap or in the small cap things like hospitals uh hospitality or you know in capital goods and and so on you know path you know pathologies. So a lot of businesses don’t come in the biggest firm there or the whole industry market the you know doesn’t make any of them come into the large cap you will find those in uh the midcap small cap you know chemicals and a host of such correct uh names and uh the importance of all of them is because at least to me and to us as a household there’s firm belief that the India story is uh has got a lot of structural legs to grow it’s a you know decadal growth outlook Definitely you know five 3 five years for sure. Sure. And you know an economy which in uh dollar terms yes if rupees be but say 4 trillion will grow you know at at a certain uh rate in nominal terms clearly over you know uh 10% in double digits. So the the the magnitude of what is going to get created uh uh will have to be created and participated uh by companies across all of them. It can’t be that yes across all segments. It can’t be that the economy becomes a from a four to a you know 7 trillion and the banking sector just kind of shrinks away. No the private bank the you know the have to participate in the credit growth and all of that and you know uh so on. So therefore the relevance of all sectors is very much it’s just a question of you know allocation and what’s the comfort. One can argue that you know the large and the midsized companies typically you know have stronger more robust business models maybe better bandwidth corporate governance this the lower you go down the market cap uh the small or the micros then there could be more vulnerability and fatality in those businesses but still there’s relevance for those as well in the portfolio. So a a certain ratio whether through a you know combination of multi or flexi or individually picking up large mid small cohort should be will be appropriate. Sure. So Gorov you sort of touch based on it maybe from a overall fun house perspective what are the sectors that would be your key overweight sectors and key underweight sectors. as a pandouse u we have been uh really uh more focused on you know sort of bottom up uh you know uh picking up businesses stocks where there is comfort on you know growth or or valuations since the markets have been volatile um as a house uh and for the last some time we have been for instance you know nicely represented in private banks for sure uh that that will still been continued that has still continued because they’re still in that you know value zone to us. Uh and I saying growth outlook has been improving asset quality is intact. Of course uh that sector and that segment the larger private banks are facing the brunt of FIS you know not participating um then we we come down to smaller and then across you know we we’ve been building as a house uh I’ll call them platform companies now they could be uh you know addressing uh discretionary retail consumption correct they you know across different categories you know right from glasses to cosmetics uh you know to financialization of you know things like broking and all that. So AC that but I would all I’ll put them under this whole platform bucket we’ve had earlier exposure but that’s another area I can see we have been adding in uh uh in recent times u then yes I mean in again with middle size sectors uh things like telecom uh you know insurance is another area where we’ve been beefing up and uh and we remain comfortable with that u yeah and there would have been some profit taking recent times and again it’s spread across sectors um maybe amongst the bigger ones could be a metals a bit of that uh but yeah otherwise then more bottom up. Sure. So Gorav uh in the two fund that you manage the large cap and the focused can you maybe highlight some of the key changes that you would have done in your portfolio and uh what do you think the funds are positioned to take and capture in the recent times? Yeah. So uh uh first of all you know in terms of the positioning uh I would say that as we you know at the start of the year there’s a certain muddied and you know we’re still in the middle of this phase correct of you know uh so um we have to be uh very agile uh in where we would want to double down on our bets you know uh so of course the first line of defense for us is the quality of the companies and the managements we own in the portfolio. So therefore that comfort is there while selecting any stock and you know that means that even though these might be as volatile as the rest of the market but we are not concerned about complete you know erosion of any of the businesses we want and ideally whatever we’ve acquired uh even in these platform companies uh which we would have added uh or in say insurance because some of what we done at the house is also you know something which has been done in these funds uh these meet all the parameters that there’s a comfort on you know high growth uh in many cases valuations also very uh you know interesting. In some cases valuations for these platform companies might look optically high but if they were to continue to execute then they there’s still a price value gap. So that the first you know this quality of business model the growth and of the management um if they’re newer companies um then you know how they’ve been executing becomes important. So that that is um you know uh one area where we have been represented because irrespective of you know whatever the background is throwing up uh some of these the they’re you know kind of growing irrespective uh simply because they’re they got a different business model where they’re probably shifting the unorganized to the organized. Sure. that kind of capture is underway whether it’s in a you know food delivery quick comm or you know the fintex whether it’s in distribution of insurance or uh credit and of course you know the payment apps so so that that’s one uh cohort uh where we would have you know u of course then u banks for instance where again the valuation comfort is there and it’s a more domestic facing economy where also there is regulatory support to provide credit guarantee to sectors which might be exposed to global flow. you know some of the uh uh domestic uh facing sectors there is comfort on the you know host of matrix we want to you know while we evaluating those firms so that’s uh there uh other than that if we earlier you know say present in pharma CDMO again as a house and even in these funds typically there’s an overweight stance there um we would want to keep uh that there were some challenges uncertainties for some of the exporters last many uh months because of the tariffs but those hopefully are getting settled down. So we you know we have that whole bunch in that um specialtity chemicals the farmer names I saying you know a couple of an you know autos which have that exposure to um us and this is because they and the rest of the world and because they have this niche that you know uh specialized advantage that irrespective of pricing they they they have that you know positioning where the customer has to more or less buy from them they’re not too many so that’s again a pace we not touched we have taken the you know sort of volatility around the tariff time and hopefully we already seen signs of pick up across a lot of those uh positions in terms of how their fillies have been how the managements are now talking uh into the future. So that’s another you know cohort of the export uh uh bucket. So yeah the you know now to your the question on how we are positioning uh these are the things which have been steadier or where we have just re been building maybe the rest of these se I mean across a lot of other sectors we have to really take it in terms of you know how the things are shaping up really um like say you know the rural part we are present in discretionary autos and all there’s good there’s been good demand uh but then again uh say in staples there have been times we we’ve added but we have to be careful about how the rural economy is going to be and so then you have to we have to watch for that you know similarly power utilities it was expected that you know summers and all will be could be strong so we are present but then again there’s some element of you know resizing positions at a certain valuation you know keep in mind so it’s it’s then you know across other cohorts metals uh in my fund for instance you’ve taken profits earlier during this year maybe a bit earlier one could argue but you know the on what I thought were you know kind of reasonable valuations but again this is dynamic because you know if there are certain developments we have to then recalibrate so the approach really will be that to be agile on a large part of some of these uh sort of uh sectors or you know the stocks and the individual positions we own And there are some you know themes where we think in any case uh as I saying some of the domestic part and some of the exports of the rupees also become favorable and hopefully the tariff issues are behind us. India signed two trade deals right with the EU and the US. Yeah and some of the other smaller. So correct that should support. Sure. So we started with the negative part Gorov maybe one quick one. What do you think can be the positive trigger that the market is waiting for? No, so it’s probably the converse of what’s taking causing the uncertainty, but uh you know it’s the global cues uh one could be from the Middle East situation actually getting kind of you know resolved more or less satisfactory. I don’t I don’t think there’ll be a permanent all sides will be permanently happy. It could recur again but at least for the moment you know key you know the the choke point state of hormonal is opened up and and energy flows are you know kind of happening normaliz yeah normalized that’s what matters as well and the other is I mean for India um there could be volatility and but if the AI trade were to kind of consolidate rather than just continue of FI flow yeah that that that which will then lead to hopefully some you know markets will rather than outflow some small inflows because they’ll realize that okay Indian you know valuations are below averages right now you know it’s a it’s a very structural markets across sectors we keep on saying that though of course the AI play and some of those things have been missing who knows you know in the later stage in the uh you know inferencing stage there could be lots of plays from India but at least uh you know where we are right now yeah yeah thanks times gorov for sharing your outlook on the Indian market and the economy and uh let’s hope next time when we talk markets have some more positive news to share and uh market sort of makes a move forward. Um so thanks Gorov. Thanks. Thanks again. Uh we’ll move to the next section where we would like to decipher outlook on the debt markets and um I’m joined by Basant who heads our fixed income uh business and Basant a very interesting day to take outlook from you on markets. uh we had the RBI policy and we also had an announcement that uh you know a lot of withholding taxes been removed to attract foreign flows to come to Indian government securities. So let me start with my first question is how do you analyze the RBI policy and second element is how do you decipher the steps taken by the government and RBI to attract foreign flows. Sure. Uh thanks for that PEV and uh you know policy uh has been bangon in terms of uh what we were expecting uh with the pass through of uh retail you know the crude price hikes by way of retail fuel price increases uh there was an expectation that uh inflation expectations for FI27 would move up uh which has been so so from the earlier expectation of 4.6% 6% it’s moved to close to 5.1%. And which looks fairly manageable. This number also includes impacts of El Nino. Uh so overall uh you know the inflation number sort of looks manageable looks convincing and remains within the tolerance band of 4 to 6%. On the growth front uh of course there will be expectations and Gorov alluded to that in his uh section as well that you know you will have second order impacts uh seeping through over the next couple of quarters. Uh and with that you know the growth expectations also have been trimmed. uh but the key issue that you know the economy has been facing over the last uh couple of months uh you know what markets are talking about now but the issues have been you know there for the last couple of years or so now uh on forex and if you go back in time you know last couple of years have been really bad uh for FPIs so post 2024 25 26 have been really bad years in terms of uh overall flows while debt flows because of the index inclusion uh were you know quite decent uh a more than a year back but last year you know it’s been broadly sort of flat to slightly positive uh but apart from that FD FDI flows also over the last you know 2 three years have been extremely muted uh add to that you know if you look at ECB costs uh the cost of overall blended cost post hedging becomes extremely unattractive so just to give you a reference point uh if you look at say for example US treasuries say 3 five year closer to four four quarter you look at India risk sovereign risk premium closer to 100 basis points um so if you add that you know you’re at five five quarter sort of levels you add to that sort of hedging costs of three three and a half% or so and you look at a number closer to 88 8.9 sort of percent now you compare that uh to a secondary market uh levels of say for example an NBFC or a PSU uh which before today were in the range of say 7.8 7.9 for PSUs for NBFC is closer to 8.2%. Which essentially meant that you know if corporates want to borrow from offshore markets uh for an end use in India the spread was more expensive offshore by close to 70 basis points bare minimum. So because of that over the last couple of years we’ve not seen any significant activity uh in terms of raising of ECBS. So all three combined the pressures have started building on the FX side one uh and in terms of domestic fixed income markets you started that seeing that pressure sort of seep into the banking system. So if you are not raising ECBS but at the same time there is you know floating rate linked uh loans which are available where you know you’ve had uh certain amount of pass through. So those corporates sort of move from offshore to banking system domestically. Uh similarly you know uh corporate bond markets have been extremely uh you know high in terms of spreads uh over sovereigns and because of that you know you’ve seen lot of uh lower activity in terms of borrowings by corporates that part of the market also has moved from markets to uh bank borrowings and because of all that you know you’ve seen spreads becoming extremely elevated and banking system feeling the uh stress. So one is on the availability of forex and you know at in times like these uh you see those pressure pressures emerging uh primarily because uh you know you’ve got uh outflows compounding over the last 2 3 months as well as frontloading of import demand because see if you look at uh the big difference between you know one availability of course is an issue but the other thing is that the alternatives when you look at alternatives of crude supply you move towards say for example advanced economies the lead time is significantly higher which essentially means that your working capital cycles increase and because of that you’ve seen uh significant amount of frontloading of demand especially with depreciative bias. So every single fall in terms of uh appreciation of currency has been dipped into uh by way of significant amount of demand. Now all of this has made uh FX in the forefront of the growth versus inflation dynamics and that is what the expectation was. You know I just wanted to spend a couple of minutes on this to give you the background on why the policy has been so much concentrated on the FX front and what RBI has done by way of this policy is that one uh you know of course the government has uh taken steps in in terms of the withholding tax. So uh you’ve had now withholding tax uh exemption in terms of capital gains as well as in terms of interest. Uh so that’s a welcome move. Uh but more than immediate flows because see if you look at India and developed market interest rate differentials they’ve become extremely narrow because our inflation differential has become extremely narrow. So more than attracting immediate flows by way of that this opens up uh avenues for index inclusion going into the future because this is one of the most biggest hindrances uh for attracting foreign capital. Uh so with this you know that opens up because this month uh or perhaps early next month uh the review is pending uh we had the earlier review closer to January and at that point of time it was deferred because of operational uh concerns regulatory issues. uh and with this you know you start that conversation again on you know whether you can have an index inclusion going forward and if that opens up you know uh while I have mentioned this in previous calls as well but uh this brings up close to 20 to$25 billion worth of flows apart from that uh you know so this is a medium to long-term sort of measure uh which the government has announced but if you look at what RBI has done uh one along with this they have opened up uh the longerterm GC market also also for FPIs which is again a long-term measure uh but in the immediate term measures there are three four measures that they have undertaken so one is on exporters so exporters hedging uh which was required to be brought back within 15 months now they’ve reduced the timeline to 9 months uh those so that uh sort of frontloads uh the inflows uh domestically but apart from that you know two key key sort of measures that have been undertaken by RBI uh one is on uh the hedging costs so uh like I mentioned in the initial remarks that you know you have uh the cost of funding which domestically translated into rupees becomes extremely prohibitive. Now RBI has suggested that they will provide some sort of subsidy they’ve not given the exact numbers uh but assuming that you know say for example the the subsidy is in the range of say 150 basis points so that 8.7 8.8 number that I had mentioned suddenly becomes 7.4 you know 7.3 7.4 four which becomes closer to 70 80 basis points from being higher than your secondaries to being lower than your secondaries right so then while this move has been firstly given only for uh PSUs uh but then that sort of brings the overall curve down because the overall supply of security itself sort of shifts towards uh foreign investors and the other thing is that you know you’ve not seen any supply so in terms of limits uh you know most of the investors will have limits freed up for India. So from availability of capital it would not be an issue from an economics point of view again it becomes attractive. So this is expected to uh see a large sort of move in terms of getting flows. The second bit is uh you know on the FCNRB. So RBI announced uh that FCNRB deposits uh when hedged back uh on RBI uh by banks uh you know that sort of cost will be borne by the RBI. So just to give you a reference point again you know you look at US treasury at 4% say 5% India sovereign if you look at say banking system say private sector banks or you know other banking system credits in terms of the spreads another 2550 basis points so maybe five five and a half% was the rate of interest that we could have perhaps offered uh on FCNRB deposits uh now with this subsidy so RBI bears the hedging cost right so 3 and a half% RBI bears Now a large part of that bearing of cost which will be passed on to uh the banks that will in turn get passed on to the consumers. So now at a time when say assume that you know 80 85% 90% is passed on to the consumers then suddenly your 55 5% becomes 88 8 and a half%. Right now you look at a situation wherein India being a country with a depreciative currency bias uh with interest rate differential still present inflation differential still present while narrowing but at the same time you look at uh the overall dollar rates for NRIs to bring money back into India above 8% which is above domestic fixed interest rates right it becomes a very attractive proposition but the timeline the window is very short so up to September uh and I think whoever can make should make use of this window while available uh because your then overall holding period returns will be significantly higher given rupee having an depreciative bias uh the only thing is that you know this is for a 3 to 5 year window uh so overall in terms of uh the policy uh clear focus on effects uh growth inflation dynamics have risks on uh you know upside for inflation downside to growth But this has clearly caused a cheer on the corporate bond markets visav the GSC market. So GC markets have seen a fall of say four to five basis points on the uh you know 10 year uh maybe the the 40 50 year part of the curve maybe around five six basis points five year part of the curve a little higher uh but if you look at the corporate bond markets uh so right from the shortest end of the curve 3 month CD curve move down by close to 15 17 basis points which gets extended to the 6 month part of the curve as well the one year part of the curve is close to 20 basis points down similarly for 3year 5 year corporate bonds again close to 20 25 basis points down. So a disproportionate move on the non-s sovereign part of the curve uh which essentially showcases the comfort of the markets in uh the fact that uh the uh announcements have been very supportive and at the same time the yield yields were also oversold. Uh this is something that we’ve discussed in in our previous uh conversations as well that you know spreads are extremely attractive. So part of it is retracement of that a part of it is support of markets in favor of what RBI has undertaken. Thank thanks Basan for this very clear elaborate answer on what sort of outlook you can look at u from the RBI and the outlook on market. Um you covered the outlook for Indian interest rates. The next question is what is your outlook for the global interest rates? Where do you think they are headed? Uh inflation clearly is a concern because of the hike in crude prices. Do you expect um global interest rates to move north? Um and what would be the outlook overall for global markets? Sure. So uh if you go back in time, you know, we started the year, the previous year ended with lot of rate cuts. You started the year with expectations of continued rate cuts. Fed itself was expecting 50 to 75 basis point sort of rate cuts. Uh while you know you have the new Fed chair coming in who is expected to have a bit of a doubbish bias but overall now we are not talking about trade cuts anymore. uh across advanced economies uh across you know you look at bank of England uh Australia you look at Canada you look at u euro zone you look at US I mean across the next move is expected to be a hike now the the reason is that when you look at the underlying numbers uh you know our macros have been extremely strong but if you look at the underlying numbers in terms of inflation while growth has been significantly resilient but inflation numbers are significantly higher I mean uh for last two two and a half because uh no advanced economy central bank has been able to reach their 2% inflation target. In fact, next print for US inflation is expected to be north of 4%. So in these circumstances uh when growth is sort of resilient not so bad but at the same time and and at the same time you are seeing a lot of uh equity investments or infra investments in AI and other allied industries and at the same time inflation is going north. So as a central bank uh you know when labor market is sort of stable when growth is there but inflation is shooting up you don’t have any alternative but to hike rates right the the question is when rather than whether it’ll happen or not. So from a policy perspective uh it’s expected that the next move will be higher. Uh from yields perspective it’s already factoring in so you started seeing uh curves flattening. Uh you started seeing longer end of the curve pricing in this. So if you look at you know US uh say 10 year 10 + 30 now spreads are sort of moving higher and higher whereas the shorter end of the curve is now flattening. So from that perspective uh markets are already factoring this in and we perhaps uh have been an unintended consequence of uh the interest rate differential sort of shrinking and the issues of developed markets moving towards us. Uh and that sort of is being seen on the currency front. uh but our macros remain healthy comparatively uh you know inflation has not moved outside the target band at all uh not expected to move as well you know over the next say 12 months uh FY27 inflation RBI now projects closer to 5.1% uh with a partial pass through of course of retail fuel prices but uh even if you consider another 78 rupees of uh retail fuel price increases which is unlikely now but even if that happens because you know crude has now fallen to close to $95 $5 a barrel. RBI assumes close to $85 a barrel for the FY. So even if you assume that another 78 rupees gets transmitted, you are still looking at inflation less than 6% for the FY which is still within the target band. Now in a situation wherein you know your growth inflation dynamics uh wherein inflation is significantly within control growth is getting impacted because of second order effect of supply chain issues which is anyway not under control of RBI right or the government government for that matter. So you need to sort of foster growth. So in the growth inflation dynamics our view is that growth will have an upper hand over inflation as long as you know you see a quicker resolution in terms of the conflict and while we are at this you know uh when you look at the overall conflict now it’s sort of bottomed or narrowed uh to two or three factors now right so one is the state of formos Iran has agreed as long as US sort of pays for whatever damages have been caused US has agreed to pay $300 billion uh in terms of the Israel and you know Hamas situation or Hisbullah so there you know they have sort of agreed to stop or have a ceasefire has not yet agreed but Iran’s concern was that Israel has not agreed so since Israel has put one step forward there is no reason why Iran should not agree now that’s sort of the second and finally uranium I mean enriched uranium you is it Iran has agreed that you know they are okay to stop enriching uranium they are okay to transport whatever uranium they have which is in enriched form either to Russia or to China perhaps not to the US but these are the I mean two three sticky points that are there which are closer to resolution now the gaps that were there between the resolution have now shrunk and therefore the expectation that once this gets resolved the question is uh you know when this gets resolved whether than rather than whether and at the same time how long does supply chain issues take to sort of get normalized The final part is that you know on this topic you’ve started seeing over the last week 10 days that increasing number of vessels are now passing through the state of hormones upwards of 25 in number. While this is not you know uh in line with what was there before the sort of crisis situation began but at least it’s a good start. You know at the peak of the conflict you had three or four tankers at max or perhaps less than that passing through. So now at least you’ve seen that sort of cycle starting. uh it’s a step in the right direction. That’s why you sort of take a view that uh in the shorter run you should start seeing some signs of resolution. Sure. So Basant I’ll take the last question. Um and I would like to try and get a perspective that bases what we’ve discussed both on the global economy the Indian economy what RBI is looking at how do you think the yield curve is looking and what segment of the yield curve is looking most attractive to you and just a followup on that one is that in this current market scenario which are the fixed income products do you think will make most sense for investors? Sure. So uh you know if you look at the overall curve the GC curve has become quite steep and it’s continued to remain steep while you’ve seen some sort of movement on the 5year part of the curve but generally the curve is extremely steep. Uh whereas if you look at the corporate bond curve now it’s sort of become inverted. So uh even after today’s move you know you have your one-year corporate bonds are closer to 770 775 uh 2 year 3ear corporate bonds 5 year corporate bonds completely flat closer to 760 sort of levels and 10-year corporate bonds while pricing has not been formed but I would assume that you know given that GC has moved by only four five basis points so you’re closer to sort of 770 sort of band uh so the curve has become extremely flat as against GC and that’s why now it’s important that to know that you know while increasing duration you’re not going to get any carry benefit when the curve is extremely steep. If you increase duration along with that you get some sort of carry benefit but when the curve is extremely fat there is no point in sort of elongating duration. So our view is that now you know given that overnight rates are still at closer to 5% lower end of the lab corridor your spreads between one year uh corporate bonds say one year CD is closer to 7 half 755. So if you compare it with CDs close to 250 basis points if you compare to corporate bonds closer to 275 basis points these are the kind of spreads that you’ve seen only in times of crisis. So if you look at the overall part of the curve, I mean 1 year to three year part of the curve looks extremely rich. But of course you should look at uh your investment horizon to be able to avoid refinancing risks or reinvestment risks in the portfolio and at the same time avoid unnecessary duration risk because while you know you’re closer to uh the resolution of the conflict, it’s not yet resolved and you don’t know what is the extent of the second order effects that this uh issue leaves in terms of scars for the economy. Right? Till the time you start seeing those green shoots emerge uh my view is that you know be in the 1 to three year part of the curve. But if you say for example investment horizon is say 6 months or so be in the ultrash short sort of category maybe 3 to 6 months. If you have investment horizon between 6 to 9 months be in the money market category. Uh one year so 9 months to one year part of the curve which looks like a sweet spot. Uh you know be in the low duration sort of category. Uh and then anything above one being in the short duration category. I would not recommend moving above short duration category at this moment. Uh while at the same time you know tactically look at a say a 30 or 40 year GC as well uh because the spreads are still quite elevated close to 70 basis points. Uh it moved to close to 60 basis points as well over the last 1 month. Uh it’s moved back closer to 70 but nevertheless the yields look extremely attractive in terms of spreads over 10 year and if you compare it back to you know last year last March uh March 25 you had spreads of 25 30 basis points. the the spread is looking extremely attractive. So tactically you can take a call there. Uh but at the same time I would look for you know more signs of structural demand. By last you know last auction you had seen some sort of tail but before that two three auctions you’ve started seeing some sort of green shoots. So I would want to see some sort of sustainable demand uh before you know giving that call on on the 40-year part of the curve. But nevertheless it looks fundamentally very attractive. Yeah, thanks Basan for giving a very candid response on the questions and uh we would request you to stay back as we take few questions from the audience after we cover the commodity section as well. So thanks Basant. Um now we’ll quickly move to the third asset class um and try and cover the outlook for commodities and international markets in this section and I’m very pleased to have Sedat Shivas join me. Uh Sedat has been with Maset for now more than 8 years. uh he manages some of our offshore funds and also has been instrumental in launching some of the commodity products that Maset has been uh taking uh money from investors. So Sudat let me start with the first question that you know geopolitical concerns continue and in spite of the geopolitical concerns very surprisingly uh the safe asset classes which is gold and silver have not performed to the extent that they usually do and we’ve seen a sharp correction in both gold and silver prices. In fact, if it were not for the sort of increase in import duty, uh the investors could have seen the impact on their NAVS as well. So, uh what is your sort of near-term outlook for both these commodities? So, first uh very quickly the reason behind the correction is um that we talked about the fact that both gold and silver ran up pretty significantly. Gold giving almost 60 to 80% return. Silver giving around 150 uh% return in just one year period. So there was a case of people booking profit moving into other asset classes. Globally we saw a significant rotation of money moving from these commodities to let’s say even investing in AI and semiconductor based u uh based stocks and ETFs etc. So there was profit booking which happened. We also saw central bank banks uh booking profit especially uh when it came to some of the um European banks and uh eastern Europeans rather and uh Turkey as well. Uh another factor which is driving this is stronger dollar. In last month we have seen uh dollar index uh rising up to around 99 and then also higher uh US yields. When yields become higher uh it is negative for the precious metal. So there are multiple factors which are creating this scenario of both gold and silver not performing well and it is contrary to the fact that typically these assets do well and when geopolitical uh risk is elevated but because of the reasons I mentioned before we are not seeing that rise in both gold and silver from a near-term point of view I think that volatility in both will continue we will continue to see weakness and then some short rebounds in in both the precious metal I see that rangebound price movement in both gold and silver in near term. Yeah sedat. So you know considering that there will be volatility in gold and silver like you mentioned what should be the approach an investor should follow should he directly buy gold funds gold ETFs separately silver funds is there a better way that he can allocate between gold and silver uh maybe if you can show your share your highlights on that. Okay. So let’s assume that there is no additional import duty or uh any constraint which is uh which is brought in by the central government. Let’s first uh address the current basic scenario. So I think if you’re looking for investment from a medium to long term then you should look at an entry point a bit uh so entry point in silver around 70 and gold around let’s say 4400 4500 I think these are good points in which you can take entry while we say typically that staggered investment is the best approach I’ll say that perhaps right now the time is to look at levels and then invest silver I see that 70 anything below 70 is great but around 70 is decent for similarly for gold anything around 4400 4500 is great below that is also something where you can accumulate the units u because the thing is that as soon as you invest at higher level suppose you invest at silver at 8084 uh your experience in silver will be very different compared to your investment at 70 right and silver has been oscillating in the between in these levels so is gold. So look at levels um uh if you’re investing from a medium to long-term point of view. What I’ll also say above that while we don’t talk about it these two asset classes are also giving some tactical opportunities. I think if you uh would have listened to my previous two monthly calls, I have been saying that you can buy around 70 and typically sell sell around start selling around 80 and I think we have already seen those three four reversions and I think we will continue to see this volatility where you will be able to buy and sell um around these levels and similarly for gold also. So you can invest tactically also that’s what that’s for someone who wants to do sort of short-term short-term earning. So there’s nothing wrong in that also but if you don’t want to take that call if you want to obviously invest and and and be uh uh don’t want to bother about short-term nuances just invest in our gold and silver fund of fund where we invest both gold and silver uh asset class and we take the call uh based on whatever our view is on gold and silver. Uh so right now it’s uh 60% towards gold 40% towards silver. We have increased silver because of simple reason that there has been some import restriction in silver and we feel that if this restriction continue there can be some premium which can build into the local uh prices as well. Okay. So that maybe you touched on a very important thing which is investing in a staggered manner. See traditionally Indians have been used to buying gold on specific dates on spe special occasions and they’ve been able to see when their period of investing is long-term they’ve been able to get a good experience. So one is like you rightly pointed out invest tactically but if someone wants to invest like we’ve seen in physical gold holding it and folding for long periods do you think that the current point of gold and silver and a staggered entry for a long term can still help create good wealth in a fund of fund structure where they can even do SIP. Yeah. So uh if you look at let’s talk first about silver silver alltime high was around 120 let’s say it was a very short-term peak but it still consolidated around 97 9900 levels right so we are looking at at a level of 70 which is 30% down from from the all-time high of let’s say 100 I treat 100 as an all-time high than 130 and same for gold was around 5,5,200 yes it peaked out to 5,500 5 or 600 but but but let’s say it consolidated more at at 5,5,100 and the right now we’re sitting at a 10 10 15% discount from that prices also so I think entry levels are decent uh but like I have mentioned previously that long-term even after this runup long-term uh uh returns of gold is around 14% if you look for silver that’s around 12% or so. So if expectations are reasonable, I think I think people will be okay and satisfied investing in both gold and silver at these levels. Sure. I most important like you rightly pointed out expectations have to be realistic. So maybe the kind of returns we saw in the last year. Please don’t expect that to be repeated soon unless something exchanges drastically correct. uh Sedat now we’ll move to the second part or we’ll change gears to international investing and you touch based on some element of it and the previous speakers had also alluded to it globally a large trade is going on where countries especially who are strong on technology especially in AI semiconductor etc have been benefiting a lot and now countries like Taiwan Korea have seen huge runups of is given that u know some of the sectors have done well how would you position yourselves in the global markets say how is US market looking versus Chinese market versus say maybe other markets and within sectors on a global perspective what are the sectors do you think look more attractive so u so I’ll I’ll take some time to answer this this in in in detail so first of all we should look at global markets as a very differential trade from what is happening in India. I think when you’re looking at Indian markets, you’re looking you’re basically investing in a billion plus consumption economy, right? You are expecting that consumption will rise in India. We will do well in manufacturing, infrastructure, uh etc. Right? Uh but when you’re talking about globally, globally we are talking about investing in disruptive technologies, technologies of tomorrow, investing in AI, uh defense tech. In fact, now even AI is an older story. Space tech is a new uh new uh uh thing. People are talking about tokenization etc. So, so I think investing globally has started to make more and more sense just from a diversification point of view that India is a place where you where you are butting betting on traditional economy, manufacturing, infrastructure, increase in discretionary consumption and I think there’s no better place to be in India if if that starts playing well uh in future when FI’s return and we see let’s say uh uh asset rotation also happening. ing from from developed markets and markets like Korea, Japan back to India. Uh but globally uh when it comes to the sectors which are doing well people are talking about bubble right u uh and concern that that these segments have have have done so much and run up so much but they have been backed by very very strong earnings right uh for example uh I’ve I’ve taken a print out because there are so many numbers but if you’re looking at NASDAQ 100 last one year EPS growth is 35%. Wow. Projected one year EPS growth is 42%. uh when we are looking at Cosby which is uh Korean stock uh index last one year EPS growth is 69.25 25 next one year projected is 160 for fang last one year EPS growth is 57 and uh one year projected is 64 so uh so we are living in a time when we are seeing such significant u earnings growth for right across NASDAQ Cosby fang etc and it is being driven by the companies which are doing great in AI. So again if we just break it down further above HK Highex which is a Korean company. So HK Highex and Samsung has been responsible for most of the 90% plus return in on a YTD in in Korea. the quarteronquarter profit growth which is from uh last quarter which is uh October to December 25 um to January to March 26 quarter and quarter profit growth web is 165%. Wow. For uh SK uh Hinx and for Samsung is 144%. Sure. Yes. Next 12 month projection is 219% for SK highix and for Samsung is plus 250%. This is the profit growth expectation. Similarly if we go down further for Google quarter and quarter earnings growth was 81% for Amazon it was 42%. for Micron which recently became a trillion dollar uh company was 163% Nvidia 34% and the expectation for Nvidia for next 12 months is 53%. So unlike in India where where we are still trying to identify u areas of earnings growth right a lot of earnings growth recently was driven by metals etc. Correct. In in US and in the markets you are seeing it driven by companies which are part of semiconductor space, AI space and related uh uh industries. Also one thing which people should note is that yes expectations are huge. We see in last two days what happened with Broadcom. Broadcom makes their earning guidance and and they had a very sharp fall uh in just one day I think of around 15% or so. So that is likely but till now in last 3 years at least uh we have seen that earnings growth have been pretty uh regularly beaten uh in terms of what the estimates was and what the companies delivered. So I think companies are well capitalized their balance sheet is strong they have enough cash uh and till now I think EI story and semiconductor story is playing well and there are enough data on earnings etc which is justifying that. Now this is a very important point because I think when investors invest uh sometimes they feel if things have gone up uh they should not go up further but see markets in the long term are slave of only one thing which is earnings and if earnings growth remain strong market momentum remain strong and maybe some of the data point that Sedat has shared clearly highlight why some of these countries and some of these sectors are doing well. uh Sat changing gears that you know some of the sectors you mentioned are not available in India and will make it very difficult for Indians to access investing. Of course through give city now you have few options through which you can buy global funds but for you know a lot of retail investors not very easy to be investing into global markets. However when it comes to India there must be few sectors where you still continue to see high growth. uh you know we like you rightly pointed a billion dollar of people consumptionled economy from from a passive perspective you have the flexibility of running differentiated concentrated mini themes as part of correct your product offering as well so which are the categories you believe have strong potential from a thematic side in India as well so first is I think that energy because of I I think government is going to focus very cleanly clean ke cleanly on clean energy. Uh so energy is one index which we have where uh there are capital good companies which are big participant in in in clean energy segment renewables etc. That is one segment which I feel is is going to do well. Uh uh defense is something which I believe that it’s a long-term story. So people can continue to invest in uh in defense. also metals is going strong. So while I’ll start getting a bit cautious on how much you should allocate in metal now but I think till till I see a trend reversal I think that story continues. I’ll just mention that we have recently launched uh a high dividend uh yield product on the equity side where we capture stocks which give high dividends and it’s a very beautiful blend webh have right now it has uh around 40% companies which are into energy around 20% companies which are into metals and around 25% companies which are into IT. Okay. So we you have two segments which are uh right now uh we are bullish on N1 contra sector of IT correct and it has a dividend yield of around 3.5%. Uh so so uh that particular portfolio not only from a from a strategy point of view high dividend I think works well in the current scenario but also how the se uh the entire portfolio is structured right now suits very well for current condition. So people can check out the uh the high dividend uh ETF which we have. Yeah. So thanks Sat for sharing all the perspective on commodities on thematic products in India as well as trying to cover globally. What is the outlook on some of the global markets and global themes that you can look at investing? I’m sure uh there would be a lot of questions that would be there on your mind. So keep putting your questions to us and we have all the three experts Garo Mishra on the equity side, Basant on the fixed income side and Sedhart on commodities stroke international markets to try and decipher these questions for us. So we will try and take as many questions as possible from you. Uh so please post in your questions and we will start uh the question and answer section. Uh first question uh for you Gorovsar is we know we’ve discussed about uh trends in AI semiconductor etc. uh we had seen in the recent times a very sharp rally in IT stocks this week and we also saw a little bit correction in the last couple of days as well. So can you help decipher how Indian IT firms are looking from a valuation perspective as well as looking at being able to compete and challenge with some of the global names and the sort of earnings road that sort of Sedat also mentioned. Yeah. Uh I hope you can hear me. Uh I hope you can hear me. Yes sir, we can. Great. Uh uh yeah go we can hear you. Oh great. see u the IT companies right now and if I may uh even the you know the software companies which we don’t have really in India but all of them have been uh assumed to be on the uh you know losing side of the AI technological development which is underway and uh therefore uh while there’s been marginal change to the earnings in any case uh post the 4Q earnings call. Uh the earnings uh outlook which the company suggested for FI27 was slightly ahead slightly better than FI26. Having said that, it’s it’s nowhere near what the you know the the uh the AI players are right now delivering whether it’s the hardware guys and the chip manufacturers and all of that. But uh what has happened is that uh because the narrative has turned so much against them there’s been huge derating and so these firms now in India the Indian IT services firms are available at very attractive valuations and dividend deals and you could say similar thing for the global IT services players like Accenture and those uh the question is now for an investor uh you know who’s willing to look beyond the short-term pain of underperformance and is got his eye on a longer horizon. Are can these be you know value plays and to that of course I have my view but you know it uh the answer is really whether one believes that the Indian IT services firms that industry will be relevant as AI you know evolution continues. Um now there there are a lot of you know sort of factors at play but in a in a nutshell I would think that the Indian IT services industry and firms will be relevant in fact will eventually address larger market sizes uh and therefore larger business opportunities but it will require that these firms and maybe all of them might not succeed but it’ll require that the managements and the leadership pivot to using these technologies and offering solutions and pricing based on you know uh uh these technologies because otherwise uh clearly the addressible market will increase because this AI has been moving ahead but infusion at corporate level is way way behind. uh in fact most of us as consumers as retail users might be already using a lot of these you know the charad equities and all of those clouds but uh at corporate level to do it at an enterprise level where all the other hygiene factors are met satisfactory whether it’s the security concerns the regulatory aspect that will require uh you know some handholding and implementation uh you know at a corporate level and that’s where I think IT services companies who otherwise have that context of the industry and the firm they’re dealing with uh will be relevant. Now it is also u you know we are seeing that the the AI firms themselves have opened up uh arms to do the implementation uh but clearly the the you know sort of u scope of work is going to be so large uh that it can’t be just the AI firm and their uh you know arm they open to you know implement AI that will take away all the market I think it’s going to be opened uh very much to the uh IT services industry the existing of course in the meanwhile from now till this whole infusion there there there can be there will be some pricing pressure you know on the legacy services some of the old which typically in any firm depending on how their portfolio is compos is comprised of it could vary anywhere between you know 15 to 20 25% where there will be pricing pressure uh you know but as long as they’re moving down the path of training the employees and offering services pricing them in the as the new paradigm suggest would require there will be a market to be had. So we’re still at early days the valuations are very comforting the character of the business otherwise is is very robust in terms of cash flows ROC’s and lastly these this industry has seen such challenges earlier also there have been technology shifts earlier whether it was you know that Y2K then the migration to cloud and the earlier the migration to you know SAP and all that where there’s always that fear that they’ll be left behind no doubt there is a period of a couple of quarters when the stocks you know are behind uh But every time they have kind of come back. So I think we’ll see again some of that repeating. This is my view of course and therefore these valuations and the prices we are at should you know be you know kind of encouraging for an investor with that horizon. Yes, the recent volatility I mean again as I saying that’s got to do with the narrative. And if the narrative shifts every day, market is not certain about you know or is trying to mimic how maybe the IT services firms in US are behaving overnight and something like that might be at play. But over a medium longterm as an investor when you’re looking at the fundamentals of you know the opportunity the skill sets these firms have and of course the valuations I think yeah it could be looked at constru. Yeah thanks. Um so Sudat there are a couple of questions uh from Mr. MKkesh Mr. Anish about the new EGR uh gold EGRs being launched and the question is will gold mutual funds consider holding EGRs instead of physical gold? Yeah, I think um so it has generated at least from a marketing point of view right amount of interest. So congratulations to NSE but it has a long long way to go because liquidity is very important when it comes to uh when it comes to buying and selling any asset right one can say that one is replicating gold but if there’s no liquidity or less liquidity just because of bid and ask spread you can lose significant amount of returns if to end up buying at a higher price because of spread and end up selling at a lower price than the mid price because of spread your realized return is far less and liquidity is still not there. Uh BSC also launched it and it didn’t work out. When it comes to ETF, uh people should note that there are multiple EMC’s which launch gold ETF and they compete to provide best of product with best of tracking with with lower cost with high liquidity on exchange. the competition in a way is quite high and and then uh there’s a drive to give the best to investors u and it can and when it comes to NSC just an exchange driving then EGR I think liquidity hopefully eventually builds up we also like competition but as far as investing in EGR is concerned we are not allowed to do it as of now if it if it comes u we’ll decide it based on the merit but as of now there is there is No reason to think about it because of lack of liquidity. Sure. Thanks Sat. I think next question is for Basant U. Basant. We’ve seen crude oil prices correct in May. They’ve been trading maybe less of $100. We’ve also started seeing in the last couple of weeks currency has done quite well compared to what we saw in the past. So with uh you know crude correcting with currency becoming more stable RBI taking a lot of steps do you think the big macro concerns which India had with respect to fiscal current account which will also have impact on the overall economy uh will cool down in the coming maybe few months or we still live in sort of an uncertain scenario. So uh my view is that we have perhaps uh you know uh addressed the bigger issue which we are seeing right now which is on the forex front. Uh which again has follow on impact on uh you know currency as well. Uh so in the near term you are not going to see a massive depreciative bias on the currency front. uh because you know these measures the broad uh estimates that you know we are getting is that close to 30 to $40 billion bare minimum you should see in terms of overall flows trickling in on account of this and the overall gap for FI27 is itself close to $40 billion uh so broadly you know it should get matched but if you look at the bigger picture in terms of what RBI has already expended it’s closer to I mean 85 $90 billion in terms of forward positions that RBI is already put in place in terms of short positions. So uh significant amount of flows are still required to be able to you know structurally uh confirm that you know we are on a strong footing. So while uh in the short term you know this is a very positive development over the next 2 3 months you should start seeing flows trickling in but overall uh you know the next quarter you should start seeing in second order effects of supply chain issues kicking in. Uh there will be uh I mean questions on fiscal as well over the next couple of quarters. uh primarily because see uh while you know crude has come down uh you are still not in the $60 a barrel era you’re still significantly higher than that and remember you know while crude has come down say from from 120 120 plus sort of levels back to close to 95 we are still closer to 50% higher than last year levels the other bit is that even if this starts retracing but before it does fully retrace we need to remember that a lot of countries have depleted their SPRs uh heading into the the last quarter and first you will start seeing a lot of demand kicking in to replenish those sort of uh buffers that have been lost. So essentially when uh crude falls you will not see a steep fall immediately. you will first see you know some sort of fall with a lot of demand coming in but then after that uh in the second phase perhaps a quarter from the resolution you will start seeing significant amount of additional supplies continuing from advanced economies as well as I alluded to in my initial talk as well that uh the lead time is significantly higher so maybe 2 months down the line 3 months down the line whatever has been contracted today that sort of comes in and over a period of time that sort of adds to the overall supply. So perhaps maybe couple of quarters uh you might see a different picture uh but over the next two quarters you will see sort some sort of uh impact continuing uh so while you know the spreads are extremely attractive but you have to be a little cautious in sort of uh navigating these times. Yeah, thanks Basant uh for answering that one. So we’ll take two last questions uh from our audience. Uh the next question from Mr. Kanak uh is on uh for you Mr. Gorov uh that you know Mr. Kak wants to know what would in your assessment be the right mix of investments across large mid and small cap at this moment. Yeah. Uh sure. I mean at this stage um given the growth outlook the valuations I think these are times where you know a reasonable representation across each cohorts is going to be relevant. Of course it depends a bit on the individual’s uh risk profile but if we are thinking 3 to 5 years at this point I would say you know at least 40% or thereabouts should be in the large cap you know 40 to 45 a similar magnitude of you know 35 uh to 40% in the in the uh midcaps and really then the rest you know the rest of 20 25% in the small caps. So it’s it’s it’s a bit it’s a bit more skewed towards the small and the mid versus say one was you know thinking of a flexi cap where the bench or rather where the benchmark is n 500 or bsc 500 where the la last cap share is over 70 75% at that so clearly more towards mid and small I hope that answers sure sure of thanks for answering that one. I will take the last question. I know Sedat there have been couple of people who have asked a question. Um and they are with respect to some of the ETFs which are there. So one is uh the investor wants to know should they be investing in BC total return index. Uh and couple of investors want to know investment in global X AI technology and electric vehicle fund. um as well as there is a question on investing in the metal ETF. Maybe if you can give an outlook on all these different products. Yeah, I’m first of all not sure which uh BSC total return index he’s referring to. So if you’re referring to 200 equal weight or dividend leaders, the answer is yes. uh especially for dividend leaders I’ve already highlighted that not only from a dividend yield point of view but the portfolio how it is looking like like right now we are very bullish on that it’s in fact is my top pick um when it comes to uh AIQ there was a smile from because it is closed from mutual fund rules but through gift city fund which we have you can take exposure in that AIQ it’s it’s a part of the portfolio and and if you ask AIQ is probably the best product to take exposure in in the AI and semiconductor story because it is not concentrated. It has 70% exposure to US, 30% exposure to uh countries like China, Korea, Japan etc. uh so it’s a global NASDAQ focusing on AI and semiconductor story. uh global EV I think one of the uh significant contributor was lithium uh prices moving up and lithium doing really well. I think if I have to pick between the two, I’ll I’ll go with AIQ. For lithium probably I’ll uh uh sort of be a bit more cautious because one of the component also is how China is doing and China from an from a consumption point of view is not doing right now as well as we expected. So, so I’ll pick AIQ over global EV right now. Though EV has done well because of lithium lithium uh segment doing really well. And the last one was which one? The metal. Metal. Yeah, I think metal is very interesting story. We have been obviously seeing that that that metal has had a very strong runup. We have been in a way seeing segments cautioning about the valuation since since last year. But but if you if you look globally metal seems to be in a in a super cycle. Earlier it was copper etc. which were doing well. Now you are seeing ferris doing well. But I’ll say that if you have a position right now I’ll hold on to it. But if you are starting to build a new position then I’ll be cautious because there can be some profit booking and trend reversal which may happen. So just be a bit cautious if you’re trying to build a new position. If you are already if you’re already invested in metals and have uh and want to add some minor position more then I then then it should be okay but just look for trend reversal uh like it has happened with gold and silver. I’m just giving you a a comparison why both are not similar in terms of performance. Same thing can happen with how significantly some of the metal prices have gone up. Yeah, thanks Sadat. Uh and I think the key element that we wanted to also drive in today’s discussion is markets have become very dynamic and news flow is changing every day. I know from this perspective only thing as an investor you can do is to have the right asset allocation mixed across all the asset classes whether it’s equities fixed income gold silver or international markets and that’s why we keep doing these monthly webinars to try and decipher investing across these asset classes. Hopefully you find these webinars interesting. If there is any feedback or suggestions that can make uh this more interactive, we’ll be happy to incorporate that in our future webinars. Uh for investors, the only message is invest for the long term. Uh avoid the noises that are there uh which you keep hearing and focus on your goal. And if you focus on your goal and your uh long-term investing discipline, I hope these are short-term blips that are there in markets and hopefully your investment journey will continue to be quite uh you know robust. So thank you everyone for joining us today. Happy investing to all of you and we’ll connect with you all of you again next month. Thank you.