00:00So what are you hoping, Devina, will move the markets forward from here on?
00:05What do you expect to see over the course of the next six months,
00:08both in terms of fundamental economic performance but also policy-making measures
00:12that you hope will help the market get out of this funk that it currently is in?
00:18My personal view is that we always look for neat little explanations
00:22for whatever is happening in the markets.
00:24So, you know, once something happens, then we say,
00:26oh, this was the trigger or this was the story.
00:29To me, the big positive in the market today is that the sentiment is very negative.
00:35So it is, if you look at most India fund managers a year or two ago,
00:41they would all be just talking the India growth story, you know, quote-unquote India growth story.
00:45Now you see people on media enumerating the risks.
00:50And that, to me, is a positive because, you know,
00:53that's what research studies show around the world from, you know, U.S., India, Portugal, Brazil,
00:58wherever they've been done, that when sentiment is overbuoyant, the next period returns are below normal.
01:04When sentiment is very negative, the next period returns are above normal.
01:08You know, that's the—so in probability terms, you're likely to do better.
01:12In terms of valuations, while, you know, suddenly people have discovered that ETFEs are higher than the rest of the
01:18world,
01:19they were higher still in 2024.
01:22And if you look at sectorally, within India, you are not at very high ends of whatever valuation parameter you
01:29want to see.
01:30In many cases, you're below average.
01:32So those are, you know, good conditions to be in.
01:35And as I said, you know, that what was the trigger, all that is usually found in hindsight.
01:43Yeah, fair enough.
01:44One last question then, Devina.
01:46Let's assume that between the central bank and the policymakers in Delhi and all the other regulators,
01:51they do everything available to shore up growth in this economy, you know, and we're on the recovery path.
01:58We get over the tariff hump.
01:59We get over the Iran war hump.
02:01Do you still feel that, you know, foreign investor interest in India will stand diminished
02:07because as so many people have been debating for the last several months, India is not an AI play.
02:12And right now, the global capital cycle is very focused on AI.
02:18But if you look at even the U.S. market, it is not as if only AI has been doing
02:22well.
02:23The Russell 2000 returns have been far ahead of the S&P 500.
02:27Every single subsector within the Russell 2000 is positive for this year.
02:33So I think the last I looked, Russell 2000 was up 18 percent, S&P was up 11 percent.
02:38So, you know, this also is a story that only AI is running and nothing else in the world is
02:44running.
02:45That's not what the data says.
02:47And within AI also now, it's not the mega scalers.
02:49It is all the guys on the CapEx side, semiconductors to even hardware.
02:55Whereas you had companies like Dell or even IBM, Intel, everybody coming out after years of not doing much right
03:05up there in the performance tables.
03:07But the CapEx side is a flaky side to bet on because CapEx, if you are a supplier for capital
03:14expenditure, every year you start from zero.
03:17So this year, the mega scalers may be putting in almost a trillion dollars of CapEx, which gives you great,
03:23not just demand, but pricing power.
03:25But two years later, will it be of the same order?
03:28So that is the big question mark to my mind.
03:30So I think this, in fact, I just wrote an op-ed this week on, you know, to my mind,
03:38that these kind of expenditure on AI will not make anywhere close to economic rates of return,
03:46which we have seen from even many transformative technologies.
03:49To my mind, this bubble will burst.
03:51It's only a when, not a if in my mind anymore.
03:54And India does have many industries, quite a range of industries compared to many other emerging markets.
04:02But as I said, I don't think, you know, the foreign portfolio investor has to come in for the market
04:07to go up.
04:08There is actually, if you do a month to month comparison for the last 25 years,
04:13even before the Indian mutual fund industry really came into it soon,
04:19there's not much linkage between the foreign portfolio flows and the direction of the market.
04:24I mean, that's the data.
04:27All right, Devina.
04:28It sounds to me like you're optimistic of an upturn in Indian equities,
04:32whether it's based on the rock-bottom sentiment or the capital cycle explanation that you gave.
04:38And so I assume you're all in Indian equities right now.
04:41That's a one-word answer, yes or no?
04:44I'm always globally diversified.
04:46But yes, I'm fully allocated to the extent of my India equity allocation.
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