Mirae's Mohanty on Where to Invest in India

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00:00Let's get perspective from Swarup Mohanty, Vice Chair and CEO of Mireille Asset Mutual Fund.

00:05Globally, they have an AUM of $613 billion. Good to have you with us. Swarup, I mean,

00:13forget the overhang, right? Just stay the course because structurally, India's story remains intact.

00:20Yes, Linda, thank you so much for saying that because, you know, when you look at investing,

00:30you look at a good asset and India remains a good asset. Let's look at the fact that even in our

00:35bad days, we've grown at 6 percent. And in some of the discussions that are happening in the last

00:40two shows just sort of emphasize that, that, you know, we're not a country which has waited for

00:45things to happen. Some of the policies that have come post this tariffs are very, very good for

00:51the average person on the street. Please remember, India is a consumption economy. And to drive the

00:57economy, you have to first start with consumption. And that's what has happened through these tax

01:02changes. Yes, the slowdown from the Indian perspective is not exactly tariffs. It started

01:06last year with an urban slowdown. But make no mistake, it came after three years of blistering

01:14growth. So some amount of slowdown was expected. I think what really surprised us on the negative

01:19side was the lack of corporate earnings. And I think that's something which we hope to get a

01:24revival from these tax cuts. Once you have consumption coming back in India, I think, you know, that that's

01:29the feather that one was looking for. So one has to wait, wait and watch. But the simple point is

01:35the government and the policymakers have taken the first step, which is very interesting to see.

01:39If you take a longer term perspective, I'm just wondering if you should be allocating to small,

01:46mid caps, which have a bigger runway, longer runway. How should you be looking at your portfolio in

01:52terms of allocations? Yeah, that's actually a very interesting question from an India perspective.

01:57When you look at the last two, three years, India has been one of the largest public issuance markets.

02:02And when you look at those public issues, a lot of those companies are in the mid and small

02:08company. A lot of industries have been added in the last two, three years, which were not existent

02:13from a market perspective. So the erstwhile cliched sort of advice of sticking larger part

02:20of your money to large caps now need to be democratized a bit because a lot of new industries

02:26say asset management, for example, a lot of hospitals, I can go on. But if you have to catch the length

02:31and breadth of the Indian market, what in 2015-16 was a very shallow, illiquid market on the mid and

02:38small has changed dramatically post-COVID. So I would look at expanding my allocations more to mid

02:46and small, especially the small, I would advise go through a manager. But on the mid cap, I'm in print

02:52saying that India is a mid cap story. So but the allocations need to change because the underlying has

02:57changed. So what kind of returns realistically can be expected if you're invested in small mid caps?

03:05OK, I'll give you a broad answer. I mean, Indian, historically, the broad nifty 50 has kind of

03:11doubled in five years time. We got a very interesting low base during COVID where it did shrink. So

03:17the last three year returns have been pretty aberration, been an aberration from the past. I see

03:23that reversing to the mean now. So broadly, when you look at the broad market, we'll come back to a

03:28erstwhile growth pattern of four to five years money double at that level. So if you want a little higher

03:34than that, maybe allocate a little more to sectoral themes or maybe structural growth stories of the

03:41future. But I would look at 12 to 14 percent India on a long term for the next decade as a realistic

03:49return, not not higher. I think some of the return expectations have to be toned down a bit from the

03:56next five, 10 year perspective. Swarup, how are you looking at commodities, gold in particular? We know

04:02that India has been buying a lot of gold. It's one of the many central bankers, central banks in the

04:08world accumulating the yellow metal. What's your take on it? How do you play best?

04:14Aslinda, India has been a gold-blind country at a retail level. Every Indian has gold at home. But

04:20it's not just India buying gold at a central bank level. I mean, it's incredible to note that,

04:26you know, gold reserves now overtake dollar reserves globally. So that's, I think, something which I'm

04:31asking myself. First while investment advice was to treat gold as a hedge or commodity as a hedge.

04:37Is that so? I mean, your answer will be more important than mine to whether this global uncertainty

04:45will end tomorrow. I don't see it ending tomorrow or day after. It's there to stay. And if one ends,

04:51the other one starts. We used to say that, you know, in case of a war, you take this call. But wars seem

04:56to be happening every second day and we're getting more and more used to it is a reality. It's strange

05:00for me to say that, but that's a fact. But when you look at that in perspective, should gold be

05:07just a hedge or should it be part of a very important part of your overall allocation is

05:12something which I leave behind to all investors, all buyers. It's no longer the same story of the

05:17past. We are used to buying gold. But maybe what the change that has happened in India at a retail

05:23level is the final shift to buying digital gold is a reality. I mean, our gold council last year

05:29advertised to buying ETFs over jewelry. So that's a welcome change to see. So I don't see gold as a

05:34hedge anymore. Quite a quite a big change from from before for a lot in the markets there. How about

05:42silver? How big should your exposure be? It depends on the risk profile. I mean, I mean,

05:48when you look at the sovereign buying gold, of course, the risk adjusted return will be superior

05:53in gold. But if one is a little risk taking silver at this moment, our house view is as has a lot of

05:59catching up to do. But it will be pretty volatile. So allocate according to your risk profile. But I

06:04think most most of us who are in the market had started buying silver some years ago or maybe two,

06:10three years ago. And that's beginning to play out. It's interesting to combine the two. If you're a

06:16little risky, maybe a little higher allocation to silver. But risk adjusted return, risk adjusted

06:21return will be in the favor of gold is my my personal opinion. So you started the year. You

06:28kicked off the year saying that 2025 is the year for accumulation. That is the best year to be an

06:33investor. Three quarters of the way through the year. Do you do you still believe that if the tax

06:42the GST would not have come? I would have still believed that. But the GST has been a good impetus to

06:47the market. Of course, it will take some time for for it to factor in. But when do you buy? If it's

06:52factored in, the big guys come in and the price is never in favor of the average investor. So it is

06:58between now and when it factors in. So so I continue my stand of this year being a good accumulation year.

07:04The risk of not accumulating is actually very high. You ask any fund manager what one wants to do,

07:10one would say that buy a good asset as a good price. India, thanks to all these issues around

07:16it is available at a decent price across pockets. We see significant price discoveries available

07:23across the market. So so I would still continue buying assets. I think I did talk about the RBI.

07:29So it's rarely that you are sitting on a point where the long term perspective of equity as an

07:35asset class in India look intact because of the change in the stance of RBI debt looks very good from

07:41an investment perspective. And and and the commodity plays there. So multi asset play looks very good

07:48in India at this moment of time. But the key is staying the course. You can't time the market at

07:53the end of the day.

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