Dalal Street Voice: FIIs are selling in Indian markets - Alok Jain of Weekend Investing decodes why?

Relative to other emerging markets India is seemingly expensive and hence it is natural for some money to be reallocated, Alok Jain, founder of Weekend Investing said in an interview with Zeebiz’s Kshitij Anand.

See Zee Business Live TV Streaming Below:

Weekendinvesting.com is a Do-it-Yourself products service where he provides simple momentum-based investing models. The unique part about his strategies is the low time-spent: returns ratio where the user spends 5 minutes a week to attend to their portfolios and the returns have so far have been beating the benchmarks by a wide margin.  

Edited excerpts:

Q) The first half of December has been a volatile one, but the equity market will be able to close the year with double-digit gains. How do you see market trading in 2022?

A) The markets have been very resilient despite the Foreign Institutional Investors (FIIs) selling in the last many months on the back of retail support. Unless there is a global event, India looks to be in a better place and may not underperform.

Q) What is your take on FII outflows? What are they most worried about?

A) I think India is a part of many emerging markets (EMs) funds that are getting sold into due to the proportionate selling and some money moving out of these funds.

Also relative to other emerging markets India is seemingly expensive and hence it is natural for some money to be re allocated
 
Q) The November MF data is encouraging as SIP tops Rs 11000 cr despite benchmark indices closing lower. What is your take on the kind of money pouring in from MFs?

A) The Indian demographics seem to be finally kicking in with a very mature response coming through from new retail investors. This trend should continue with some natural corrections on the way.

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

A) The infra and real estate cycle seems to be turning around and these are usually the sectors that do well in inflationary environment. The demand in these sectors could keep metals and cement and housing related industry in good demand.

Q) The year 2022 will also put the Budget back in focus. What are your expectations from Budget 2022? Any particular reform which investors’ are eyeing from a market and economic perspective?

A) There are not many expectations from Budget 2022 other than there should be nothing that rocks the boat unnecessarily. A hugely deficit year funded by higher taxation is a big risk if the divestment program does not take off.

Q) We are at the close of the year 2021 and markets valuations are not cheap anymore. A lot of global investment banks have also highlighted expensive valuations after the recent rally. How do you see that playing out in 2022?

A) Yes, valuations are not cheap, but this cannot be compared to the past as the overall money supply in the world has also doubled if not more.

So, in that context of per unit of money out there, we are still where we were a year back maybe. The traditional metrics system is no longer relevant in the same way.

Q) We saw over 50 mainboards IPOs so far in the year 2021, compared to 14 in 2020. What is the trend that you see for the next year?

A) IPOs are a straight function of robust markets. As long as markets are robust, the IPO pipeline remains strong. I see the next few years of a good IPO pipeline.

Q) Do you see more of tech-based businesses making their way into equity markets? And which other sectors and prominent companies that could be in focus?

A) Tech and new-age start-ups should be the ones that will come to the markets. These are the companies that are taking away the traditional market share from the conventional companies that are unable to transform themselves and hence it is natural that these companies will be the ones replacing the old guard.

Q) What are your views on the small & midcaps? Do you foresee a year of consolidation in the broader market after the recent rally?

A) Yes, I see some consolidation for FY22 for small and midcaps and the broader rally but don’t foresee a major downtrend unless there is an external shock to the system.

Q) Govt plans to go big on the Semiconductor business. Which companies are likely to reap the benefit?

A) I think it may be too early to comment on this program. Maybe at a later date, once the initial steps have been taken, one would be able to identify winners.

(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.)