April 22 2024,
Calendar year (CY) 2024 has been a choppy affair for the Indian equities so far.
But VIKAS KHEMANI, founder, Carnelian Asset Management & Advisors, believes that
India offers once in a lifetime opportunity to create wealth. Puneet Wadhwa spoke to
him over phone to know the reasons behind this optimism. Edited excerpts:
Should investors brace for more
volatility in 2024? And will the intraday swings get bigger in terms of
absolute numbers?
2024 should be a low-teens kind of
year as regards market returns. Shortterm movement can be due to geopolitical conflict, increase in the crude
oil prices, and more-than-expected
inflation print in the US. These are
hard to predict.
By 2035, India’s marketcap can touch $18-20 trillion as compared to around
$4 trillion right now.
The
Nifty 50 can reach 100,000
by 2035. If this is the kind
of wealth creation opportunity lies ahead, one should
only approach investments
from a long-term perspective. Any short term volatility should be only an opportunity
and not risk. Historical fault lines of
Indialike high current account deficit (CAD), fiscal situation, weak banking system, leverage, and inflation
are not there, which makes us believe
that we will be in a low volatility
environment.
What’s your key differentiator as regards the Bharat Amritkaal fund? There are many such funds that already exist.
The Carnelian Bharat Amritkaal Fund
is designed to capture the exponential
growth opportunity India offers as it
becomes a developed nation by 2047.
As we transition from $4 trillion to $30
trillion in gross domestic product
(GDP), many new sectors and themes
will emerge and create massive
wealth.
Through this fund, we are
focusing on high growth companies,
benefitting from seven megatrends
arising in India during Amritkaal
period, propelling structural/ accelerated growth in five sectors.
We have done a lot of work over
the last 6-8 months in the
process of preparing for
this fund and at times
even, we were surprised
when we looked at many
trends, possibilities, and
opportunities in likes of
financial services and
insurance (FSI), tourism,
pharma, luxury consumption, EMS, defence, education, ER&D and many
more. India offers once in a lifetime
opportunity to create wealth.
Is the era of making a quickbuckin
the equity markets, especially the
mid and smallcaps over?
It really depends on one’s time horizon. We see mid and smallcaps as a
real pot of gold. From a 10-15 years perspective, mid and smallcap are likely
to outperform the larger index, as they
have done in the past. In 2001, there
were only 20 firms with over $1 billion
market-cap. Today, we have over 512.
This reflects the journey of small and
midcaps. We think this number will go
t0 5,000. Fundamentally, India is well
placed in terms of growth and return on equity (ROE) than compared any other emerging countries Valuation of any asset is an interplay of fou‘l;vié}xlctlorts, ROtE, .and risk premium. 1n each of these factors, India is far better placed than any time in the past and better than any
other market.
If this is the case, why should
people question and worry about
India’s premium valuation compared
to the past and other emerging markets (EMs).
We are not making a point
that there are no risks, or there won’t
be any volatility in the markets. There
will be. Surely, there are pockets of
euphoria, which one should avoid, but not the markets as whole.
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