Dalal Street Voice: 2022 is likely to be much more challenging year as compared to 2021: Sameer Kaul of TrustPlutus Wealth

2022 is likely to be much more challenging year as compared to 2021. Equity valuations have become expensive given the run-up in the last 18 months, Sameer Kaul, MD, and CEO, TrustPlutus Wealth (India) said in an interview with Zeebiz’s Kshitij Anand.

Sameer has a rich experience of over 25 years. He has held various positions heading operations, mortgages, retails banking, private banking, and wealth management across leading domestic and global entities.

Investors should stick to their asset allocation and moderate return expectations from equities in the year 2022, highlights Kaul. Edited excerpts:

 
Q) Omicron, US Fed taper fear to infuse volatility in markets. Where do you see markets in the next 12 months or so?

A) 2022 is likely to be a much more challenging year as compared to 2021. Equity valuations have become expensive given the run-up in the last eighteen months.

Investors should stick to their asset allocation and moderate return expectations from equities in the year 2022.

Q) The Budget 2022 is also a few months away. What are your expectations from the Budget? Do you think it will be a populist one that could hurt the fiscal math of the government, which is already strained due to COVID?

A) The government finances are in good shape as a result of buoyant tax and GST collections. We do expect a continuous focus on reforms keeping in mind the overarching government priorities on reducing government ownership in non-strategic assets, creating incentives to encourage local manufacturing, measures that may provide a fillip to import substitution as well as a healthy pipeline of disinvestments.

Q) The year 2021 will also go down as a year of IPOs when many niche or new-age business got listed. How do you sum up 2021 in terms of primary markets and your outlook for 2022?

A) Several new-age companies have tapped the capital markets with their IPOs and we have seen record subscriptions in bulk of these issues.

There were 16 IPOs in 2020 and the amount mobilized through these issuances was ~INR 26,628 Cr. In the first 11 months of 2021, around 54 IPOs have come to the market and the amount mobilized is ~INR 1.11 Lac Cr! The development of the capital markets is extremely positive for Indian entrepreneurship.

In the absence of any systemic shock, the momentum in primary markets will carry forward into 2022.

Q) The year 2021 was a volatile year but bulls managed to remain in control. How do you look 2021 – key highlights which stand out from a market, fund or business perspective?

A) The key highlights include the dramatic increase in the number of demat accounts in our country, the constant increase in mutual fund SIPs, and the listing of many new-age companies in the Indian markets.

Q) FIIs remain mostly net sellers, especially when it comes to the cash segment of Indian equity markets. How are FIIs looking at India in the light of sooner than expected tapering from the US Fed?

A) Broadly speaking investors continue to view India as a market that provides many opportunities over the long term.

The proliferation of smartphones, the rapid growth of internet connections, the potential deployment of 5G technology, the increase in the number of banking accounts, and the growth in digital payments have all created an ecosystem that can support rapid growth for years to come in India.

Q) Which sectors are likely to hog the limelight in the year 2022?

A) As themes we like high dividend-paying low P/E stocks, we continue to be constructive on Indian private sector banks, IT companies, and select Pharma/FMCG names.

We will be closely watching how the two-and-a-half-player telecom market evolves, given that all the operators have hiked their prepaid tariffs.

Q) Any particular themes that remained in limelight in 2021 and could well remain relevant and in demand in 2022 as well and why?

A) Unless there is any systemic shock, we do expect that new-age companies will be able to access capital markets and enough capital will be available across public and private markets to support Indian entrepreneurs.

Q) What were your key learnings from markets in 2021 which investors should take note of?

A) The biggest learning is that you cannot time the market and that time in the market is more important than timing the market.

Secondly, investors should diversify their investment across asset classes and across investment styles.

Lastly, investors who do not have the patience to remain invested in equities for the long term should look at some type of index-linked hedge to limit drawdowns in their portfolios.

Q) What are the key risks that investors have to face in 2022?

A) The key risks are continuing concerns as a result of the spread of the Covid-19 virus, high inflation and excessive tightening by the central banks that may lead to a dry up in liquidity.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)