FIIs are back but retail has started selling; stay cautious on auto, IT & FMCG: Dinshaw Irani
Dinshaw Irani
, CEO,
Helios Mutual Fund
, says
Foreign Institutional Investors
(FIIs) have returned to the Indian market, injecting $3.5-4 billion, signaling active investment. This inflow contrasts with US debt ETF outflows, suggesting a reversal of funds previously moved from India. Concerns remain about high valuations, and retail selling is impacting mid and small-cap performance.
Irani remains cautious about auto, IT and certain pockets within consumer space like paints as well as FMCG
Help us with your take on the markets because the months gone by have been great for the Indian markets, at least the FIIs have made a comeback. The earnings, especially the kind of disappointment within the IT companies, with the valuations coming to the forefront and investors seem to be liking it. What is your overall mood on the market given that we have already seen a good run-up from those March lows?
Dinshaw Irani:
The fact is FIIs are back. In the last two weeks, they had pumped in something like $3.5-4 odd billion into the market and the flow was very sustainable because if you look at the emerging market ETFs or India dedicated ETFs, they have not seen much flows. Basically, what this is hinting towards is that this is active money that is coming back and that is quite surprising.
If you relate it to what has happened in the US, the US debt ETFs have seen huge outflows. Basically, the money which had moved out of India had gone back to the US because they were worried about valuations, about the rupee, and the fundamentals. So, that money went back to the US, parked itself there and that is what is coming back. The fact is the US per se is now coming under a big question mark.
US President
Donald Trump
has been backtracking a bit and fortunately for the world as such, since he is more worried about the equity markets and it is obvious because twice he has backtracked on big calls that he made in the market. One was obviously the tariffs, once the markets started collapsing, he had to backtrack on those and he gave a 90-day reprieve.
Secondly, Trump has been after the Fed chair Jerome Powell, and when the markets went down, he backtracked on that. So, there is some sense prevailing out there, but frankly, it is still too early to call it out. Secondly, the bigger problem is the India valuations. The quarter went by which is now getting reported. The numbers are not that exciting and valuations are feeling a bit stretched because from now on, you will see cuts in earnings which are already happening. Most of the numbers that got reported saw a cut in earnings and that is where the concern is.
Live Events
You Might Also Like:
Uri or Balakot style, India-Pakistan clash can't be ruled out; may impact stock markets, economies: Swaminathan Aiyar
Frankly, we are just being a bit cautious. We are fully invested though. We have some cash – 3-4% – in a couple of funds, but otherwise we are fully invested. In my long-short fund, we are 61-62% net and ready to pull the big trigger whenever there is a pullback.
We have seen Trump actually easing a bit on his rhetoric. Are you happy that this weekend you did not have to wake up to some new rhetoric by him? Was it an easy Monday morning so far for us?
Dinshaw Irani:
Yes, it was, but the
India-Pakistan
tension is yet to play out. There something may happen and maybe that will impact the markets. But looking at the past, whenever these events have happened, the markets have only rallied up. Our Indian markets are much more resilient to this. But now the only unfortunate part is the valuations, that is where the concern arises. I do not know how many of you have noticed this but there has been a constant selling by retail I believe in the markets and that is why the midcap and smallcap space has been fairly weak as compared to the largecaps.
The largecaps have held up quite appreciably and that is where the major cuts are happening because the IT pack gave a totally disappointing set of numbers. There was a relief rally out there, but I do not think that is sustainable. So, there are quite a bit of question marks right now.
You mentioned some sort of a selling pressure coming from the retail investors. No doubt, month-to-date you have a buy figure coming in from the FIIs. But the
retail investors
getting a bit jittery is a cause of concern. As you mentioned, the valuations are a bit stretched. Where are you looking for value right now given that we have seen a sharp fall, then a rapid rise. Now you are struggling to go ahead and allocate funds, isn't it?
Dinshaw Irani:
Yes, definitely, because we have our comfort zones. One big comfort zone for us has always been the financial, the BFSI space and we have seen results out there. If anything, they have done fairly well, apart from microfinance and some of the NBFCs reporting disappointing numbers. The bulk of the reportage from that particular segment has been fairly strong, that is one area that we are very comfortable with.
You Might Also Like:
F&O Talk | Sharp rally in sight for Nifty above 24,380, Bank Nifty may resume uptrend beyond 55,600: Sudeep Shah
Secondly, a set of numbers are yet to be reported by the hospitality sector, and that is going to be a surprise because if you are tracking that sector on the ARR basis, they have been fairly exciting. The numbers are fairly high YoY also. Again, having talked about hospitality, let us talk about hospitals, the healthcare sector. That is another area where we are comfortable with and that is going to report very good numbers going forward. These are the specific areas we are comfortable with and where we are trying to park our money.
Which are the pockets that are not looking that great to you because I just cannot get over the fact that at a point when Tata Motors was hitting around Rs 1,000, you guys came ahead and made a short call on not just Tata Motors but the overall auto space was not looking that exciting to you. At this point in time when you are having a cautious stance on the market which sectors are you betting big on?
Dinshaw Irani
: We remain negative on the auto space. You saw the numbers from Maruti. You heard the commentary from the management. The only space that looks good right now in the auto space is probably the SUV space and unfortunately that is what the US is targeting for India. That is where they want to send their cars in and at zero duties and stuff like that. That will create a lot of competition going forward. EV has been a big disruptor anyways in that space.
The second space that we do not like and have been negative for the last probably two-three months is probably IT. Except for some pockets here and there, IT is going to be a major sufferer of what is happening in the US. There is a slowdown building in and that is what the world is betting on today.
If you look at the way the bond markets have been reacting in the US, it is obvious that they are looking at a slowdown going forward and if that happens, IT is a big loser because the US market is their biggest clientele. Secondly AI will play a big role in disrupting the existing model of IT, and so that is another reason why we are so negative on IT today. It is better to stay away from that segment.
You Might Also Like:
Top-performing India fund sounds caution on stocks, raises cash
Certain pockets within consumer space like paints, we do not see much growth possibility. I do not think that the rally in paints space is going to sustain given the way the dynamics of the Indian economy today.
And of course, FMCG where the valuations are again stretched. There was some amount of uptrading happening, but that has also stopped. I do not think that area is looking good. So, these are a few areas we are very cautious about.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
26 minutes ago
- Hindustan Times
Indian govt report in 2022 foresaw China rare earth export crisis
As Indian manufacturers are scrambling to deal with supply-chain disruptions caused by China's restrictive policies on the export of rare earth metals, in many of which it has a near monopoly, experts are pointing to an early warning of this — in a 2012 strategy paper prepared by a steering committee headed by the then mines secretary Vishwapati Trivedi after a similar crisis caused after Beijing restricted supplies of the critical materials that are needed in the auto, space and clean energy industries. Also Read: 'China deal done': US to lower tariffs to 55%, allow Chinese students for higher ed Back then, they added, India felt the heat of Chinese squeeze and on August 9, 2011, the government set up an 11-member steering committee to develop a strategy paper on status and availability of rare earth elements (REE) and energy critical elements (ECE). The committee was chaired by the mines secretary and co-chaired by chairman of the Centre for Study of Science Technology (C-STEP). Members included senior officials and experts from the Department of Science & Technology (DST), the Geological Survey of India, the Bhabha Atomic Research Centre (BARC), the Department of Atomic Energy, the Defence Research & Development Organization (DRDO) and the chairman of India Rare Earth Ltd. Also Read: China can't afford double standards in fight against terror: S Jaishankar The forward of the committee's report titled ''Rare Earths and Energy Critical Elements: a Roadmap and Strategy for India', published in July 2012, said: 'In view of the increased demand of REE and near monopoly of supply from China, there is a need to develop national policies and implementation strategies for ensuring indigenous supply of REE… A Steering Committee was constituted by the ministry of mines with the ultimate intention of preparing a strategy paper for the government, providing short, medium and long term options along with proposals for specific policy & legislative interventions.' Also Read: 'Gratitude to Indian Navy': China on rescue of crew aboard cargo ship which caught fire off Kerala coast The report was blunt about Beijing's approach. 'China has been the major supplier of rare earths all over the world. Even though it has only 37% of global RE resources, it has captured the worldwide market to the extent of 97%. The low cost and efficient production process enabled China to monopolize the rare-earth market, forcing rare earth operations around the world to close down. Indian Rare Earths Ltd (IREL), which was once a leader in export of rare earth compounds had to shut down its operation in 2008,' the report added. 'Over the last couple of years China has imposed restrictions and curtailed its export by over 30% citing domestic demands as the reason. This unexpected decline has restarted rare earth operations once again throughout the world,' the report said. The same thing is happening again. Indian industries are suffering due to shortage of the critical minerals. According to a Reuters report published in Hindustan Times on Wednesday, automobile majors such as Maruti Suzuki have cut near-term production targets because of rare earth shortages. 'Government departments, particularly the ministry of commerce and industry, are holding hectic meetings with industry and other stakeholders to resolve the supply crisis. Government is using diplomatic channels asking Beijing to relax supply curbs for the Indian industries,' one of the people mentioned in the first instance said. The ministries of mines, commerce and external affairs did not respond to an email query on this matter. China's curbs on exports of rare earth materials have been officially raised through diplomatic channels by India, especially in view of the impact on manufacturers of electric vehicles, people familiar with the matter said. The issue reportedly figured in a meeting between Indian ambassador Pradeep Rawat and China's vice foreign minister Sun Weidong in Beijing on June 5. 'China's move was primarily aimed at the US and the impact on India was collateral damage. We are hopeful that the matter will be resolved soon,' one of the people said. It is not clear how China's deal with the US —the two countries reached a framework agreement that will now have to be approved by their respective Presidents —will affect this. The matter is expected to figure in discussions during a visit to India by Sun Weidong, a former Chinese ambassador to New Delhi, beginning on Thursday, the people said. Sun is visiting India to continue discussions with foreign secretary Vikram Misri aimed at normalising bilateral ties following the end of the military face-off in the Ladakh sector of the Line of Actual Control (LAC) last October. Auto manufacturers affected by the curbs on rare earth exports too have sought to reach out to Chinese authorities but without much success so far, the people said. Two days after India and China reached an understanding on withdrawing forces from the two remaining 'friction points' on the LAC last October, Prime Minister Narendra Modi and President Xi Jinping met in the Russian city of Kazan and agreed to revive several mechanisms to restore normalcy in ties and to address the long-standing border dispute.
Indian Express
an hour ago
- Indian Express
Alarm bells in textile recycling hub Panipat over suspension of Bangladesh rags supply
Traders and manufacturers in Panipat, India's largest textile recycling hub that receives discarded clothing from multiple countries for recycling and resale, have raised concerns over the suspension of shipments from Bangladesh, the top source of rags for recycling in India, The Indian Express has learnt. 'Rags and recycled items were not part of the restriction on garments through the land border route that the government announced in May. Traders in Panipat are complaining that the shipments from Bangladesh have been halted but it is unclear why this step has been taken,' a person aware of the development said. While traders plan to raise the issue with the government, they remain unsure about the reason for the halt in exports. But the development comes amid heightened trade tensions between India and Bangladesh after Dhaka's Chief Adviser Muhammad Yunus called for the extension of the Chinese economy around the strategically important North-East India region. This assumes significance as over 200 tonnes of rags are recycled in Panipat every day, with 150-200 mills operating in the sector. Their key sources of rags include discarded clothing from Western countries, but Bangla-desh alone generates over 0.5 million metric tonnes of textile waste from its factories each year. The suspension of exports of rags and textile waste coincides with Bangladesh attempts at seeking Generalised Scheme of Preferences Plus (GSP+) status in the European Union, which would result in the removal of tariffs on over 66 per cent of EU tariff lines. The EU is one of Bangladesh's biggest export markets, but the country is set to lose concessions in 2026 after graduating from the Least Developed Country (LDC) status. To qualify for the GSP+ scheme, Bangladesh must enhance its domestic recycling capabilities and meet specific conditions related to labour rights and governance. According to news agency Reuters, increased local recycling could save Bangladesh around $700 million annually in import costs, as several countries, including India, ramp up their textile recycling capacities. India recycles or reuses approximately 4.7 million tonnes, or about 60 per cent, of its textile waste. Political and economic tensions between India and its largest trade partner in South Asia have been growing, especially as the Union government in May imposed a series of import restrictions on goods from Bangladesh, particularly on ready-made garments, the country's largest export item and a key source of foreign exchange. This followed earlier signs of deteriorating ties, including New Delhi's decision in April to terminate the five-year-old transhipment facility for Bangladesh's export cargo – a mechanism that enabled Dhaka to ship goods to several Western countries using Indian land routes and airports. Notably, Bangladesh also imposed port restrictions on Indian yarn exports via land ports, allowing such exports only through seaports. This move, an official said, was ostensibly in response to demands from Bangladeshi textile mills – despite the fact that the land route offers the quickest and most cost-effective yarn supply to the ready-made garments industry in Bangladesh. Yarn exports to Bangladesh account for 20 per cent of India's total exports to the country, which were valued at $11.38 billion in FY25. Official data showed that cotton yarn and handloom product exports to Dhaka stood at $2.39 billion during the last financial year. Meanwhile, India imports ready-made garments from Bangladesh valued at over $700 million annually. Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More
Indian Express
an hour ago
- Indian Express
PM has put country on path of long-term growth, says Ashwani Vaishnaw
The BJP on Wednesday highlighted the 'transformation in the lives of an average Indian citizen' as well as the strides in both the country's economy and its standing in the global order in the last 11 years of the Narendra Modi-led NDA government at the Centre. Union Minister Ashwani Vaishnaw gave a presentation on the 11 years of 'seva (service)', 'sushashan (good governance)' and 'gareeb kalyan (welfare of the poor)' under PM Modi's leadership. He said 'humongous tasks' had been fulfilled under the Prime Minister's leadership to put the country on the path of 'long-term growth'. Union Home Minister Amit Shah, Defence Minister Rajnath Singh, BJP national president Jagat Prakash Nadda, Finance Minister Nirmala Sitharaman, Road Transport and Highways Minister Nitin Gadkari besides national spokespersons and senior party leaders attended the event organised at Bharat Mandapam in the presence of senior editors and journalists from the print media. The presentation focussed on statistics related to 12 'big picture' achievements in each sector ranging from the welfare of the poor and the marginalised to the welfare of farmers and women's empowerment, ease of living for the middle class, infrastructure development, affordable healthcare and enhancement of India's per capita income from a little over `86,000 to `2 lakh, among others. In addition to this, the Union Minister also sought to underscore the changes in the very 'vision' of governance undertaken by PM Modi since taking over in 2014 with the welfare of both the nation and its citizens at their core. 'Earlier, there was competition among districts when it came to being declared 'backward', but PM Modi's vision is different; these became not backward but aspirational districts… Under his government, the economy of the very country which enslaved us for 150 years has been surpassed… 'Defence agents', once common in Delhi's corridors, are now a thing of the past,' Vaishnaw said. 'Instead of breaking the back of Naxalism, earlier governments used to only acknowledge its presence across what was called the 'Red Corridor'… Article 370 was treated as a given, something that nothing could be done about, but not any more… No other Prime Minister before him made an announcement as crucial to the welfare of our girl children as the provision of sanitary pads at `1, (a promise) made from the Red Fort,' he said. Vaishnaw also underlined India's stature as a global leader when it came to the indigenous Unified Payments Interface (UPI), through which digital transactions of an estimated `214 lakh crore had been done till January during the 2024-25. Jatin Anand is an Assistant Editor with The Indian Express. Over the last 15 years, he has covered bureaucracy & politics, crime, traffic & intelligence, the Election Commission of India & Urban Development among other beats. He is an English (Literature) graduate from Zakir Husain Delhi College, DU & specialised in Print at the Asian College of Journalism (ACJ), Chennai. He tweets @jatinpaul ... Read More
