HomeMarket NewsIndia’s growth story is intact, broad leadership of NDA is not going away: Raamdeo Agrawal
India’s growth story is intact, broad leadership of NDA is not going away: Raamdeo Agrawal
Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services stated that India’s growth story is intact and believe India GDP growth 8-8.5% will not go away.
In an interview with CNBC-TV18, Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services stated that India’s growth story is intact and believes India's GDP growth of 8-8.5% will not go away.
He also emphasised broad leadership of NDA is not going away.
Below is the verbatim transcript of his interview with CNBC-TV18.
Q: The market, of course, voting with their feet, shock and disbelief for now. A lot of the pre-positioning from yesterday being taken out, I mean, would have been out by now, but your first thoughts as you look at these numbers trickling in?
A: This is a classic risk of investing in the markets, equity markets. So very clearly, the risk was not visible for quite some time, for the last three, four years, it was looking as if there is no risk in the market and there is only buy on the dips or whatever. So now this deep cut is coming in and it is because the expectation set were at a very different level altogether in terms of very large majority for BJP itself and we are talking about closer to 360-370 seats for NDA. So there is a huge gap and I think, whatever little they can make up in final tally, but it can be either way in the sense that in the final tally when the trends are bad, typically final tally is also confirmed to the bigger trend.
I would think that what is visible on the screen and market has voted with a bang and 40 lakh crores of loss that's quite significant. So the issue is that right now, there is no buyer. There's blood on the street right now. So it reminds me of Buffett's quote, be greedy when others are fearful. So I think those kind of thoughts are coming now, but it's quite a shocking mandate. It is a kind of fractured mandate, there is no majority to any party.
But good thing is that we have our NDA coalition claiming, I mean they will form the government and BJP is going to be the large party, 240, 250 seats, maybe even 250 upwards kind of thing. So, I think, on the whole, everything is not lost. But I think there is a big loss in the political dialogue and maybe what the politicians will do in the incoming Budget or the way they will manage the economy.
Q: One question, just to follow on, if say the NDA lands up at about 300 and there is political continuity as you said, whatever has to happen will happen today and from tomorrow it perhaps becomes a bit more settled?
A: Domestic investors are fine in the sense that mutual funds and domestic investors, they are fine. I think the real issue is that what the FIIs will do. In any case, they were selling, India was looking expensive to them and now with this slightly uncertain political environment, they will be even more emboldened to sell that's my sense.
I would keep my fingers crossed on what would be their activity and what they will do and hence for a few days it will be fluid, market will be fluid and it will take time and even the people who have incurred losses, they also need to absorb the losses and get back to the ring. So I think it's a lot of mess right now in the market.
Q: When you say it's going to take time for things to settle down, it's still fluid so you think till Budget, markets could be in this tenuous state right now?
A: There are a lot of things today itself, let us get it over what is the final verdict, then what is going to the dispensation in terms of the PM, and then what is the kind of coalition, what the coalition partners are saying, who else further joins here. So all these things will keep happening. Then finally, once the government formation starts, maybe in a week's time, then I think by that time, all the pessimism will be over. Then we'll start looking at again, because India has the momentum, that 8-8.5% growth, that is not going away. The broad leadership of NDA is not going away. In this pessimistic environment, there are a lot positives also. Please don't underestimate the 8% momentum in the economy. It takes a lot to bring that kind of momentum, particularly in a global environment which is not that supportive.
So, clearly, there is a lot going for the economy and now, and more or less same kind of government is going to come with little less bargaining power. So, let us see how they negotiate, how they manage the economy, but my sense is that negative thoughts will, max is going to happen today and maybe tomorrow and then I think things will start stabilising.
Q: On that point in the past couple of years what retail investors have also focused on is their midcap and smallcap portfolio. Given what we are seeing on the screen, what would your recommendation be to a retail investor who is heavy on mid and smallcaps at this point? Do you lighten your portfolio or do you stay through this volatility and if so for how long?
A: You have to stay through this crisis if you are a true investor, because as an investor you can't be selling low and buying high, otherwise it will be a disaster. So this is a part of the total process, if you have made 4x, 5x in last 3, 4 years, then some 20-30% you have to give in and that is where the patience is required to be an investor. That bad time has to be faced in your portfolio and this is the bad time so, have patience and have courage that India's story has gone nowhere. I mean, I am pretty sure whichever the government, whatever is the coalition or something, I think broad India's story is not derailed and everybody wants development. Maybe a little bit of the, the consumption, the rural distress and even the monsoon has been very bad in last 2-3 years, current year monsoon will be better. So, I think lot of good things are happening.
Just that the expectations set till yesterday in the markets were like gigantic and today we are getting complete shock and that shock is being corrected in the market and maybe some more correction in next 2-3 days or 4 days and then the India story again continues.
For full interview, watch accompanying video
He also emphasised broad leadership of NDA is not going away.
Below is the verbatim transcript of his interview with CNBC-TV18.
Q: The market, of course, voting with their feet, shock and disbelief for now. A lot of the pre-positioning from yesterday being taken out, I mean, would have been out by now, but your first thoughts as you look at these numbers trickling in?
A: This is a classic risk of investing in the markets, equity markets. So very clearly, the risk was not visible for quite some time, for the last three, four years, it was looking as if there is no risk in the market and there is only buy on the dips or whatever. So now this deep cut is coming in and it is because the expectation set were at a very different level altogether in terms of very large majority for BJP itself and we are talking about closer to 360-370 seats for NDA. So there is a huge gap and I think, whatever little they can make up in final tally, but it can be either way in the sense that in the final tally when the trends are bad, typically final tally is also confirmed to the bigger trend.
I would think that what is visible on the screen and market has voted with a bang and 40 lakh crores of loss that's quite significant. So the issue is that right now, there is no buyer. There's blood on the street right now. So it reminds me of Buffett's quote, be greedy when others are fearful. So I think those kind of thoughts are coming now, but it's quite a shocking mandate. It is a kind of fractured mandate, there is no majority to any party.
But good thing is that we have our NDA coalition claiming, I mean they will form the government and BJP is going to be the large party, 240, 250 seats, maybe even 250 upwards kind of thing. So, I think, on the whole, everything is not lost. But I think there is a big loss in the political dialogue and maybe what the politicians will do in the incoming Budget or the way they will manage the economy.
Q: One question, just to follow on, if say the NDA lands up at about 300 and there is political continuity as you said, whatever has to happen will happen today and from tomorrow it perhaps becomes a bit more settled?
A: Domestic investors are fine in the sense that mutual funds and domestic investors, they are fine. I think the real issue is that what the FIIs will do. In any case, they were selling, India was looking expensive to them and now with this slightly uncertain political environment, they will be even more emboldened to sell that's my sense.
I would keep my fingers crossed on what would be their activity and what they will do and hence for a few days it will be fluid, market will be fluid and it will take time and even the people who have incurred losses, they also need to absorb the losses and get back to the ring. So I think it's a lot of mess right now in the market.
Q: When you say it's going to take time for things to settle down, it's still fluid so you think till Budget, markets could be in this tenuous state right now?
A: There are a lot of things today itself, let us get it over what is the final verdict, then what is going to the dispensation in terms of the PM, and then what is the kind of coalition, what the coalition partners are saying, who else further joins here. So all these things will keep happening. Then finally, once the government formation starts, maybe in a week's time, then I think by that time, all the pessimism will be over. Then we'll start looking at again, because India has the momentum, that 8-8.5% growth, that is not going away. The broad leadership of NDA is not going away. In this pessimistic environment, there are a lot positives also. Please don't underestimate the 8% momentum in the economy. It takes a lot to bring that kind of momentum, particularly in a global environment which is not that supportive.
So, clearly, there is a lot going for the economy and now, and more or less same kind of government is going to come with little less bargaining power. So, let us see how they negotiate, how they manage the economy, but my sense is that negative thoughts will, max is going to happen today and maybe tomorrow and then I think things will start stabilising.
Q: On that point in the past couple of years what retail investors have also focused on is their midcap and smallcap portfolio. Given what we are seeing on the screen, what would your recommendation be to a retail investor who is heavy on mid and smallcaps at this point? Do you lighten your portfolio or do you stay through this volatility and if so for how long?
A: You have to stay through this crisis if you are a true investor, because as an investor you can't be selling low and buying high, otherwise it will be a disaster. So this is a part of the total process, if you have made 4x, 5x in last 3, 4 years, then some 20-30% you have to give in and that is where the patience is required to be an investor. That bad time has to be faced in your portfolio and this is the bad time so, have patience and have courage that India's story has gone nowhere. I mean, I am pretty sure whichever the government, whatever is the coalition or something, I think broad India's story is not derailed and everybody wants development. Maybe a little bit of the, the consumption, the rural distress and even the monsoon has been very bad in last 2-3 years, current year monsoon will be better. So, I think lot of good things are happening.
Just that the expectations set till yesterday in the markets were like gigantic and today we are getting complete shock and that shock is being corrected in the market and maybe some more correction in next 2-3 days or 4 days and then the India story again continues.
For full interview, watch accompanying video
(Edited by : Vrushali Sawant)
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