00:00Sir, in our show, we have a segment of stocks in our show, but because we are not talking about
00:05stocks in short term, we will talk about sectors. Basically, we will try to understand in this segment, which sectors
00:14we are promising to have better returns.
00:17Sir, first of all, there are some sectors to keep on the radar, because we have seen the market in
00:23this week, all sectors have come in pressure, which were trying to recover the market.
00:30Banks are in pressure, IT is in pressure, and it is not getting out of pressure.
00:36Gold stocks are in pressure, because the import duty has increased and PM has an appeal.
00:41Gold companies are in pressure.
00:44Gold stocks are in pressure.
00:44In other words, the pressure was also in the reality sector.
00:48While the reality was a sector that we were competing in gold or in real estate, but that is also
00:55in the reality pressure.
00:56So, there is no sector where we can see.
01:03Exactly.
01:04See, where we have seen pressure last week, especially where we don't buy gold,
01:11which is a company in real estate.
01:12Because of that, if you were from home, you can promote it, so that is the demand overall can go
01:16down.
01:17So, there will be various factors.
01:19But, see, this is always true when there are companies that are fully priced and overvalued.
01:24Right?
01:25If you look to the index level, where there are aviation stocks, some gold companies, which are in jewelry, deal
01:34with 70-80.
01:35a fully priced stock and with this assumption that the high growth estimate is not a margin
01:46in it.
01:47Now when there is an external factor, that is the risk that when you invest in an overvalued
01:54stock, what is the trigger, nobody knows the trigger and who had expected PM is going
02:01to come and you know talk about something which is going to impact the one of the best companies
02:06right.
02:06It is one of the, the sector itself is there are not many options but the jewelry or gold
02:12sector, if you talk about listed stores, there are two companies and they are going to impact
02:18this.
02:19So this is a very good reminder that why you should worry about valuations right, so where
02:25it is the most important impact, which is where overall generally higher valuation or premium
02:30valuation, if you don't say over valuation, then it is the premium valuation, now from the
02:37same lens, if I look at the broader market, where do I find value right.
02:42So financial services, especially large scale opportunity financial services because Nifty
02:48you will see 35, 40 percent, 38 percent as far as financial services is the biggest segment
02:54of market.
02:57Now there are certain pockets where you have general asset management companies, insurance
03:02firms or consumer finance, which are the favorites, they are fairly priced in the overvalued
03:10territory.
03:11But if you talk about banks, especially public sector banks or housing finance companies,
03:18or some infrastructure NBFCs, all of them are very, very attractive from valuation and growth
03:23perspective.
03:24So we have a very good part where we are, you know, significantly allocating.
03:30And if you see power is one area, which has again emerged in this crisis also, this has emerged
03:37as one of the favorite because this is a fundamental infrastructure capability that we need to invest
03:44in.
03:44We have been investing to certain extent, I think more investments are required.
03:48So that is the other area that we like.
03:51You know, and business services, there are certain other niche areas, but these are the two predominantly
03:56very clear.
03:57Her, you know, large mid small, her capitalization, you will get companies and they are quite investment
04:04worthy today.
04:05Okay.
04:06Sir, you have mentioned power.
04:08Is really market opening an opportunity, when crude prices are high, then power and energy
04:15sector is now becoming a marketer?
04:17See, energy is always tricky because there are too many moving parts.
04:25There are also retailers and refineres where their margins are differently linked to crude prices.
04:35But if you go to power specifically, where the now the call is more and more moving away
04:42from even from let's say natural gas and try and move towards the electrical stuff where
04:49you know, even household energy consumption more and more should be driven by power.
04:57That is what the mandate is emerging or the whole Middle East crisis.
05:01So see crude prices was and we being net huge importer of crude.
05:07That was always a worry.
05:08And we wanted to diversify that.
05:10But with the logistics, you know, challenges in terms of, you know, moving the oil around the globe.
05:17So there is an additional risk.
05:19There is a heightened pressure or need to wean away from the traditional oil and gas and
05:26explore renewable sources of energy.
05:29And there is power in your focus.
05:32Whether you talk about renewable energy, you know, through solar, through hydro or you know,
05:39grid.
05:40So the whole ecosystem I think is fairly priced.
05:43It is up for higher growth.
05:45Not the in terms of absolute terms, but the growth of 4 to 5% in this area.
05:50Let's say, you know, the previous decades.
05:53You know, the double digit growth move.
05:55So with that valuation, you know, this is still attractive space.
06:01And I think the middle crisis or the oil shock is just accelerated, you know, all these attempts
06:09to move towards renewable.
06:11Okay.
06:13Sir, defense sector is very focused.
06:15In the past one month, if we saw it, it was better to see the defense sector.
06:20It has been on the ground, but it has been on the ground.
06:23But this week, it was dropped in the defense sector.
06:26If I tell you about numbers, it is almost 2-2.5%.
06:31However, the defense sector is quite promising.
06:35If we saw the global brokerages report,
06:38they are also talking about the defense sector in India.
06:42The train is not missed.
06:44Is there a chance for the market now?
06:45Or is it possible to feel FOMO?
06:47Yes.
06:48See, this is a very long journey.
06:50The train has not missed.
06:51The train has been running.
06:53And you have to wait for the next stop.
06:56The valuations are at a full level.
07:00Okay.
07:02There is no worry about the growth outlook.
07:05And that is how the market has repriced this whole segment significantly over the last five years.
07:10But you have to focus on two things.
07:13One is that you have to always wait for a station.
07:18If we talk about the train,
07:20that you don't want to go on the train.
07:22It can be a lot of risk.
07:24So, the premium valuation is already running.
07:27And I invest in the growth chase.
07:29I invest in the defense companies.
07:31Pure play defense.
07:32So, that is something that is not advisable.
07:35You have to wait for entry points.
07:38Valuations will be correct.
07:39The company will be fundamentally driven.
07:41So, it is not that.
07:43Because globally,
07:44and why you said that most of the brokerages are positive on this sector.
07:48Because the growth outlook is actually absolutely perfect.
07:51In terms of the heightened geopolitical crisis.
07:55Every country is increasing their defense budgets.
07:58And in India,
07:59the budget is also increasing.
08:00And there is also an effort of indigenization.
08:03So, both are helping the domestic players.
08:06From that angle.
08:07So, definitely,
08:08there is no problem of growth.
08:10But once it goes into full valuation,
08:13then the market,
08:14the companies will basically,
08:16because of their nature,
08:17sometimes the orders don't come at times.
08:19Sometimes the execution gets delayed.
08:21And market will react to the price.
08:24And that is where you have to,
08:26you know,
08:27when the negative news flow is there.
08:28When the company is actually has delivered,
08:31not so attractive growth.
08:32But you still believe in the growth story.
08:35And you still believe in the order books.
08:36And their execution capability.
08:37So, at that time,
08:38you will not have to buy this stock.
08:39Right?
08:39Of this time,
08:40from the negative news,
08:41you will get a entry point.
08:43And then we have to go into focuss way.
08:48We will invest in full valuation.
08:49To do full valuation.
08:52And you will expect that
08:52we will not expect exciting or attractive returns.
08:56We will be very speculative.
08:58and again see
09:00our habit
09:01investors
09:03last one three five returns
09:05and that's how we started
09:06to invest
09:07you will have to change
09:10the parameter and framework
09:11you will have to do that
09:12you will have to do that
09:14when three years
09:15five years back
09:16these companies were trading
09:17at single digit PE
09:18practically right
09:19and today
09:20they were trading
09:21at 40 50 60
09:22PE
09:22so this is why
09:23this is so amazing
09:24return
09:24now
09:25there is no expectation
09:27high growth
09:28so the market
09:30can get a little bit of return
09:32in the areas
09:33when the market
09:35is still mispricing
09:36that's wrong
09:36so it's very very
09:38valuation driven
09:40stories
09:40you will have to focus
09:43on the other way
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