Market Guru in talk with RJ Salil Acharya of Radio City: People can invest in companies doing India specific business

If two countries cannot live together with love forever, then they cannot continue to fight for life. So, eventually, the war will end and the situation will be back to normal, says Anil Singhvi, Managing Editor, Zee Business. During a candid radio podcast, 'Kadak Currency’, with RJ Salil Acharya, Radio City, 91.1 FM, Mumbai, Mr Singhvi said there is a great opportunity in this fall to invest money in companies doing India specific business, as well as capital goods companies.

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RJ Salil started the podcast, 'Kadak Currency' by talking about the Russia-Ukraine war and termed it as a different war where global economic sanctions are being applied and asked Mr Singhvi about his opinion on the situation and will it have a far-reaching effect on the economy? To which Mr Singhvi said, we are also a part of the global economy and this is not the first time when a war has happened and probably will not be the last but the methods of war change with time. After the 1991 war of Iraq we had seen, we are seeing this war. But this time, the war is being fought on two fronts and they are (i) the war that is happening between Russia and Ukraine and (ii) the economic front. When the war is fought on the economic front and two factions are created in the world, then it is a matter of fact that it will have an effect on the markets and the same is visible at this point. In the short term, we, in fact, the world is going to be affected by this war because the prices of many commodities are increasing and there are several commodities/products whose supply is decreasing, being stopped, and there is an atmosphere of uncertainty across the world. But even you know that if two countries cannot live together with love for rest of their life then they cannot continue to fight for life. So, eventually, it will end, hope it ends soon. After that, the situation will be back to normal.

To which, RJ Salil said that every Indian is considering every Indian has a thought that what is going to happen with the prices of diesel and petrol in the next week or ten days, elections are going on at present, but after that can there be an unbelievable situation where the price of petrol and diesel can go up by Rs 20 or so for a short term, due to which the inflation can go up by a huge percentage, which will further bring a further on us. Mr Singhvi in his reply said, it may and will happen and it is happening to some extent. But we also have reserves of oil and this is a time when there is a war-like situation – it is said that you save money for a bad time as well as the food and drink – the government keeps oil reserves. So, I am sure that the oil reserves will be opened gradually and will be used. So, the price will increase due to that but it should not increase wildly. Secondly, as there are chances of end of the war or a decline in the situation then oil prices will again fall. So, it is a short-term, i.e., a week or two, affair and we have to deal with it post that maybe the oil prices will be back to normal. And, once the war is completely over, there is peace, then it is not a big deal that the crude will come back to $70-80 and we can also see that.

In his next question, RJ Salil asked about the traditional saving instruments, like fixed deposits, as people are looking towards them because there is uncertainty but inflation has increased a lot. So, people who are afraid are willing to go back to fixed deposits. Is it right? Mr Singhvi said it depends on the what is your risk-taking power but the best investments are made only at the worst times, as far as the equity market is concerned. But the issue is that there is not just one challenge for the equity market that if the war ends everything to be okay, the answer is probably no because still there is a risk of an interest rate hike, inflation as well as sell-off by FIIs, big IPOs in March, all these challenges are present in front of the market. So, I think, it may take some more time for the market to pick up. So, in such a situation, if there is a situation where the war has ended, and the market will jump based on such news then you should reduce your position if you are sitting with a short-term view of two to three months. This situation is not a big issue for those who have a view 2-3 years view, and such things will continue to happen for long-term investors, it has happened in the past and is happening now, as well. We were at 12,400, COVID came and we got down to 7,500 and today we are at 16,500. So, the market rises after every big fall and there is no doubt about it. So, in such a situation, the long-term investor must not be afraid but if you are a positional trader and short-term investor then whenever there is a bounce based on reports related to the end of this war, then gradually exit your position, book profit, have cash and then whenever the market gives you a good opportunity in the next 2-3 months again then use the cash as a new investment.

Then, RJ Salil said in a hunt to find new investment spaces, a lot of people use the method of the mutual fund, which is good, but there is a category named conservative hybrid category in this. This conservative word has been given by the SEBI and in hybrid 25% is equity market allocation and 75% is debt allocation. What do you think about it for this current time? To which Mr Singhvi said, you can manage your portfolio in two ways. Put only that much amount in the equity as per your risk-taking capabilities and you can stay for a long time and put the rest of your money on the fixed income or debt mutual funds or fixed deposits, which you like. In addition to this, there is also a second way where you can take advantage of both by putting your money in just one fund and that is the hybrid category. What happens in this hybrid category funds, you put your money in the mutual fund and the fund manager takes his decision from his mind, i.e., when he has to put what amount in the equity and how much should be kept in the fixed income. So, what he will do is when the market falls, he will increase money in the equity, he will increase the exposure and whenever the market rises, he will book profit from equity and increase the money in the debt or fixed income. So, instead of doing this work on our own, it can be done in a better way and timely by the fund managers as they have expertise in it and they do this work day and night. So, this is a difference, and maybe those investors who do not want to take a big risk at this point of time, it can become a good opportunity to look forward towards hybrid funds, which are also termed as dynamic asset allocation funds, where you can switch between the equity and debt and this is done well by the fund managers. So, I think this can be a good fund where you can put your money at this point.

After this, RJ Salil said there was a huge fall in the Indian equity markets but it balanced itself after this and bounced back the next day. He also enquired about Mr Singhvi’s recommendation for the next week to two if people get good pricing for it. Mr Singhvi smiled and replied by saying the first thing is who has the profit and people say who has the money for new investment, actually liquidity is present only at one place and that is the eyes of the investors, which is still moist. Such kind of liquidity is available but Indian investors have matured and those who are putting their money in SIPs should continue investing in SIP and if they get an opportunity then can increase the amount in SIP. Those, who have a horizon of long-term investment, should make a new investment at every fall of 3-4% like it reached a 16,200-16,250 level earlier, which was a good opportunity. If it falls further to 15,600-15,700 then you can invest 25%-30%, so, you can invest gradually at these levels. Or you can also opt for a short blast SIP for the next four to six weeks and put 15%-15% in the next six weeks wherever it has to go will go to that. Secondly, the second question is where one should invest then you should invest only in the companies and sectors that have to do only with India and has nothing to do with the world outside India. You can invest in such a space because the risk is a bit high across the world. So, we have India-based auto companies, IT companies and pharma companies who have more business in India. Secondly, also in those companies those who are not impacted directly due to the rise in commodity prices, although the increase in crude prices increases the prices of petrol and diesel, it is an indirect impact, but stay away from the companies whose raw material cost are going up directly. So, there are many spaces in India where you can get good opportunities to invest. So, one should invest in companies that are doing India specific businesses and capital goods companies. It is a good opportunity to invest in this fall.