Kanika Agarrwal, Co-founder, Upside AI thinks that the financialization of savings is going to be the single biggest theme for the markets over the next 10 years – it will give our market depth, liquidity, and maturity.

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She has over 11 years of experience in finance and investing, having worked with companies including Mayfield India, Credit Suisse, and EY.

In an interview with Zeebiz's Kshitij Anand, Kanika said it’s a new financial year, and investors should reset their investing habits. Add some rules to the decision-making process, and make sure that they are following a sensible asset allocation. Edited excerpts:

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Q) The Nifty50 closed FY22 on a strong note with double-digit gains. How do you sum up FY22 and what are your expectations for FY23?

A) FY22 was a rollercoaster year – started strong and the last two quarters have been very volatile. This is to be expected. FY23 has a lot of factors to consider –yield curve inversion risk, inflation, the ability of companies to pass on rising costs.

There are potential tailwinds of earnings growth positives, FPI flows returning, oil prices going down, etc. We expect a volatile FY23 and have launched a product, the Upside Navigator, precisely to deal with this volatility better.

Q) At a time when leaders are discussing tougher action against Russia, markets have remained relatively stable. Trading on Russian bourses also started. Do you think the worst is factored in by equity markets?

A) I think markets like certainty. Surprises, and not actual events, are what moves the market. So, anything you and I can think of is “factored in”.

However, there are many unknowns in the current geopolitical landscape – how does the current Russia-Ukraine conflict end? Is China now incentivised to take a more aggressive stance on Taiwan?

How will the West react? How does the world deal with grain scarcity if there is no export from Russia/ Ukraine?

Further, there are bound to be multiple macro-economic surprises throughout the year given the scale of liquidity in the world and the plan to slowly withdraw it.

Therefore, there will be new “worse case scenarios” and that is the nature of the markets.

Q) Which sectors are likely to be in focus in FY23 and why?

A) I think infra-adjacent sectors, commodities, banking and auto are interesting because of the kind of news priced in. Like I mentioned above, surprises will have the highest beta impact on these sectors.  

Q) Anything which investors should do differently in the new financial year?

A) Yes. It’s a new financial year. Reset your investing. Add some rules to the decision-making process. Make sure you are following a sensible asset allocation.

Having said that, retail has shown great maturity through the volatility, and you can see that in SIP flows.  

Q) In the precious metal space, we saw 17% rally in Gold, and over 70% upside seen in the Silver. What is your view on precious metal space in the new year? How should investors go about investing – digital or physical route?

A) We think gold is a great asset class. Because it’s been an equity decade, the interest in gold has been muted.

However, at our end, we launched a product the Upside Navigator to take advantage of gold, debt, and equity to beat Nifty50 but keep volatility in the portfolio low.

Q) At Zeebiz we celebrated March 24 as Wealth creation day as it was a day when the Nifty50 made a bottom in 2020 and since then it has been a wealth creation opportunity for investors. What were your key learnings?

A) There are so many learnings over the last two years for us:

a) We are a rules-based investor, so our main learning has been to not deviate from our system.

b) We were continuing to buy while the markets were crashing because the system indicated buys. This reaffirmed our faith in a systemized approach and making sure you stick to your rules.

c) Wealth creation is not easy, and it is important to stay humble.

d) Building a system means we can ruthlessly analyse what doesn’t work and then fix it.

Investors should make that a key takeaway from the last two years, that be honest with yourself on what is skill and luck.

Q) Some global rating agencies have downgraded the GDP forecast for India – will that impact markets and earnings trajectory? What are your views?

A) One year or the other is irrelevant in the journey of a country. India has always traded on potential. We are seeing in startups the power of Indian entrepreneurs and technology.

We have built our digital infrastructure faster than our actual physical infrastructure. India is on the cutting edge of tech, particularly in financial services and this is what makes me very bullish on what we are going to do over the next decade on the economic front.  

Q) BSE has now 10 cr registered investors on the website – what does it say about the investment climate which has evolved over the past 2 years?

A) That’s how change comes – “gradually, and then suddenly” in the words of Hemingway.

Financialization of savings is going to be the single biggest theme for the markets over the next 10 years – it will give our market depth, liquidity, and maturity.

It will lead to new classes of products – for example, we had only a PMS for high net worth individuals but have now launched a smallcase for retail investors because direct stocks is now a separate asset class.

(Disclaimer: The views/suggestions/advice 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.)