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00:00Rishit, help us with the outlook for the Indian markets
00:03because GST reset, that has happened, implementation from today
00:07is the whole trade war and what happens to the India-US trade deal
00:11is something that the markets are watching out for.
00:14What's the sentiment that you are gathering for the Indian markets as of now?
00:20Yes, thanks.
00:21So, Indian markets, as we've all seen over the last year,
00:25has been difficult, you know, initially coming down, then recovering,
00:29but there being a lot of volatility, but it seems to me from all angles,
00:35you know, fundamental, macro, technical cycles, a lot of quants that we do,
00:40obviously, all combined that the worst seems to be over.
00:45Having said that, there is still going to be some more volatility
00:47and uncertainty for the next one or two quarters,
00:51but I think in phases, things should start getting better.
00:54Obviously, the reason for the last one year to not be easy has been about,
01:00you know, overextended valuations, earnings growth also not coming in
01:05over the last few quarters, and, you know, the overall macro
01:09and geopolitical uncertainty globally.
01:11A lot of that still continues, but from a lot of angles,
01:15seems to be in the last phases.
01:17So, you know, as those things start clearing up, I think, you know,
01:21we'll start seeing markets headed higher.
01:24Overall, you know, my view at a broader personal level is that,
01:29like I said, the next one or two quarters, you could still see some volatility,
01:34but the nearer term breakdown, if I do, then, you know,
01:38overall slight uptrend from now itself is the way I would look at it.
01:44But there could be some volatility from now till Diwali,
01:47from Diwali to New Year, an uptrend.
01:50There is some seasonality usually, which also supports that, you know,
01:55and as further numbers start coming, I think that will also help.
01:58And then again, some uncertainty, some volatility in Jan to March period.
02:02But post that quarter, I expect that, you know,
02:05the longer term uptrend of the market should start picking up again.
02:09Okay, Rishi, hi, morning.
02:10So that's your sectoral, I mean, that's your near-term outlook coming in on the market right now.
02:15But you did speak about overextended valuations.
02:18Now, given the way the market has been correcting largely
02:21and been in a tight range for so many months now,
02:24do you believe that some of the sectors that were very heavily valued earlier,
02:28they now start to look attractive on the back of that?
02:30Have you been doing or are you considering any rejig in the portfolio?
02:34Yes, so see, for us, we are fully systematic, as you may know.
02:41So obviously, we run a lot of models which combine, you know,
02:44fundamental traditional data and alternative data.
02:47So there's a lot of signals, obviously, that come in from the fundamental data on value,
02:53quality, you know, sentiment, etc.
02:55But there's a lot of alternative data which gives us a faster, you know, measures and faster signals.
03:02And therefore, you know, you can actually rebalance at shorter intervals also.
03:07So there's a lot of stuff we do which is very different from the markets.
03:10And therefore, you know, it's more like, while there is a longer term view embedded,
03:16but it is a mix of a lot of short term views.
03:19So there's a lot of short term rebalancing that keeps happening,
03:21which leads to that, you know, longer term sort of outlook.
03:26So from that perspective, you know, what is immediately showing up,
03:30for example, we also have a sector rotation model.
03:33So, you know, what shows there and that can obviously change on a monthly or a quarterly basis.
03:37But for now, of course, autos are looking interesting from that angle.
03:43So both model and of course, GST, you know, tailwind is there.
03:47That is looking good.
03:50PSU banks, so overall banks are looking slightly better.
03:53But within that, PSU banks are looking even better than most private banks.
03:58And then telecom and retail are slightly looking better and selective metals as well.
04:04What is not looking that great is FMCG.
04:09So despite some excitement, post the GST on FMCG, you know, it still doesn't look as interesting as many other sectors.
04:20And from a price action perspective seems to be faltering.
04:24So both combined fundamental and technical and quant, it doesn't look as interesting as originally people were thinking.
04:32And IT is obviously the difficult one, right?
04:36I mean, it's underperformed in the last six, nine months.
04:41A lot of news flow coming into it, including, you know, over the weekend.
04:46Looks that this current H1B news would not impact too much for most of the companies.
04:55And even for those that do, it will be minimal only.
04:58But having said that, there's been too much news and too much talk even around the AI impacting it.
05:04Growth has anyway been sluggish in that sector last few years.
05:08So, you know, that is going to be the difficult sector.
05:11But just from a, you know, price action perspective, it does look overextended on the downside.
05:18So, you know, while our models would typically avoid or, you know, underweight such a sector, I mean, it could be possible that some of those things start, you know, playing out much better.
05:32So there could be some reversals in selective pockets in that segment.
05:36So from that angle, it is interesting.
05:37But if someone wants to take a longer term view and, you know, get into it post all clarity, then obviously one should still avoid it till more clarity emerges.
05:47All right. That's about the sector of preferences right now.
05:51But along with that, Rishi, I mean, this market, you're also coming out with a new fund.
05:56And that's a FlexiCap fund launch that will happen.
05:59Help us understand how is this fund going to be different versus what we already get to see in the markets, what sort of a risk management will be at play here?
06:10Sure. Happy to.
06:12So this is going to be a very different fund from what is out there in the market.
06:16It is in the FlexiCap category.
06:17So obviously, NSE 500 is the benchmark, but it is a purely systematic process, what we call SAE, which is Systematic Active Equity.
06:28BlackRock does have a global division called SAE, Systematic Active Equity.
06:37Okay, we've snapped that line.
06:40Let's move on.
06:42And Rishi, once again, thanks so much for kicking us through what your near-term market outlook is.
06:46And the sectoral preference as well.
06:49But while we're talking about the GST theme, let's talk about a sector of beneficiaries, and that is cement.
06:54Among all the other sectors, you also have cement that has...
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