Talked to an investor today who manages >100M+ USD fund in India
Was catching up with a friend of mine in Gurgaon for lunch today. Afterwards, his uncle joined us because they had to get some work done for his cousin's wedding. So, I came to know that he manages an equity fund for a popular wealth management fund in the country.
He was commenting on the recent rise in the market after quite some time now. According to him, we are maybe in the midst of a good bull run with good capital inflows already in the market. He mentioned that there will always be naysayers until the markets get overbought and then naysayers will start screaming that we're in a bull run when it is already too late by then to buy anything.
However he did mention two of his major concerns. FIIs combined hold a very significant amount of holdings in the Indian market when compared to DIIs, this means that there is some risk when they decide to book profits.
Secondly, he commented that it fine to trade as a hobby but remember that there are players in the market who will hunt stop losses during a bull run. You will never know when that happens. So avoid trading and buy and hold was his advice.
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"FIIs combined hold a significant amount of Holdings in Indian market when compared to DIIs." I don't think this is true. FII holding has reached decadal lows, which is sub 17%. For FII>DII Retail would have to be holding at least 66% of Indian stock market ($4tn+MCap), which can't be true. A quick google on Mutual Fund's AUM, gives us the figure of INR 50tn or $600bn or 15% of Indian Stock market cap. And then you have Insurance + NPS + PF...
You’re correct. The fact being alluded is that, profit booking zips up liquidity in the markets especially when significant capital is tied up with FIIs who can sell during election szn.
The data point that FII ownership has been at decadal low alludes to the point that FII have been in constant selling mode in India over the last couple of years. But domestic demand through SIPs have counterbalanced the effect. When 2008 crisis happened, FII selling broke the Indian market. But now we are much more immune to such threats as seen in the last couple of years. Why would FIIs sell during election szn? While markets may seem overheated right now, a lot of FII ownership is disproportionately allocated towards large cap private scrips, which have largely underperformed the market, with little of no significant movement in prices (while showcasing EPS growth). And not sure how much risk they are associating to the outcome of the current elections.
Hi @salt
Will a fund manager for Indian Equities ever publicly profess bearish views on Indian Equities?
We might be in the middle of a long bull run, but the current ATH seems a little overvalued tbh
@majboormajdoor I completely agree. There are biases.
Just sharing for you all to make sense of it.
And like they say, do your own research.
Buy and hold is almost always a solid advise. Except when you have some inside info that is. 😅
Even if FIIs book profits, I'm sure there would be plenty more who would jump in to replace them. Given current positioning of India's macros and larger enthusiasm of foreign funds looking at India as preferable mvp in emerging markets, I believe things would balance out. So yeah, hence, buy and hold appears to be a strong advice
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