Dalal Street Voice: Investors likely to get a lot of opportunities to create wealth in SAMVAT 2078: Mohit Ralhan of TIW Private Equity

Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW Private Equity, said that Samvat 2078 is expected to be the year of normalization, and therefore, investors are likely to get a lot of opportunities to create wealth.

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In an interview with Zeebiz's Kshitij Anand, Ralhan said that the IPO activity is only going to accelerate. India’s start-up ecosystem has matured significantly, and with more than 40 unicorns now, it is the third-largest in the world. Edited Excerpts:

Q) What is the big message which you want to give to your readers on this Diwali 2021 on markets, investing, wealth creation, or in general? What are your expectations from Samvat 2078?

A) Samvat 2078 is expected to be the year of normalization, and therefore, investors should get a lot of opportunities to create wealth.

The biggest expectation is that the COVID eventually becomes endemic, and effective medicine is found, which prevents hospitalization, therefore making it similar to any other viral infection.  

This will probably be the most critical trigger for the markets to go up. The economic recovery across the world, including India, is likely to continue and therefore corporate earnings should keep pace.

The central banks will need to tread through the fine balancing act between inflation and growth, and their actions will be watched closely. But overall, Samvat 2078 is likely to be a good year for India.

Q) Which sectors are likely to hog the limelight this Samvat 2078?

A) Inflation plays and industries or companies with high pricing power will be the top priority. Consumer discretionary, energy, logistics, and real estate associated sectors such as building materials are likely to do better.

With the opening of the economy -- the travel and hospitality sectors should also offer good opportunities.

Q) It has been crazy SAMVAT 2077 – your big lessons for investors?

A) The biggest lesson is to remain invested and overcome the psychology of fear and panic. During certain periods, volatility can be high and therefore the portfolio allocation between equity and non-equity parts are critical.

The allocation to equity shouldn’t be high that forcing investors to panic and exit at the worst possible time.

Scenario building is also important, and investors must think in advance of their actions if markets take a nosedive from here to the extent of say 20%, or 30%, or even more.

This may or may not happen, but scenario building will prepare investors to not make any irrational decisions. Investors must also spend significant time and effort to understand the interplay of sectors at different stages of economic and business cycles.

There are always opportunities in the market, but like any other field say engineering or medicine or law, for example, one needs to do the hard work of learning and practicing to become a good investor.

One can’t become a good doctor or lawyer, without years of studying and practicing the craft. Somehow, the same rigor is not associated with investing. These are the fallacies that a year like SAMVAT 2077 tend to correct.  

Q) On the IPO front – many big tickets IPOs are lined up in SAMVAT 2078. How is the IPO activity likely to pan out by next Diwali? What you're advising your clients with respect to a flurry of IPOs hitting the D-Street?

A) The IPO activity is only going to accelerate. India’s start-up ecosystem has matured significantly and with more than 40 unicorns now, it is the third-largest in the world.

The success of start-ups creates a virtuous cycle, encouraging further entrepreneurial activities and high availability of funding.

Not only in SAMVAT 2078 but beyond as well, investors are likely to get huge opportunities on the IPO front.

Q) Retail investors have become active when it comes to supporting the market or in IPOs. How do you see this change? Although we have only seen a rising tide, what if the tide reverses?

A) The participation of retail investors is likely to increase. A USD 5-trillion economy with potential savings of 30% means an annual saving of USD 1.5 trillion.

How much of these savings will get invested in equity markets can only be guessed, but in all scenarios, the absolute amounts are going to be higher and rise rapidly.

As far as the reversal in the tide is concerned, it is not a matter of if but when. The markets go through their ebb and flow.

A major part of equity investing is managing the volatility and if an individual investor doesn’t have the required time or interest to learn the ropes, then he/she must take the route of mutual funds/ETFs, or wealth/investment advisors.

Q) ETFs have also become a popular way of parking money. How do you see this as an investment product for Indian investors? It is popular in the US and other countries?  

A) The ETF market in India is at an early stage. It is quite popular in the US with a net asset close to USD 5.5 trillion. Given the experience of the US, the ETF markets in India are likely to evolve rapidly.

Both ETFs and mutual funds should be part of an investor’s portfolio, who is relying on professionals. Actively managed mutual funds can be a good way to play the overall market. ETFs are in general passively managed, and it is a better way to take exposure of an index/basket of stocks since it costs less than owning a mutual fund.

Q) What would you suggest to investors for SAMVAT 2078 on Gold and investing overseas?

A) Gold and overseas investments, both should be part of the portfolio allocation. Investing overseas is a must if an investor has current or future dollar liabilities. For example, if one wants to send his/her kids for studies overseas.

Overseas investments are becoming easier with several new-age companies providing this facility. Finally, it all drills down to portfolio allocation and adjustments to the same at periodic intervals.

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