Not the time for speculative bets; stick with what drives the economy: Anurag Singh

Economic Times

22-04-2025

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"So, it is like exit America trade where yields drop, equities drop, and the dollar drops. So, that is how I see. I do not know to what extent this craziness would go but, obviously the president sees that if the market is not responding the way he would have thought the market would respond, he would have to take his energies out somewhere and then that comes out on the big loser guy asking the resignation of the loser guy. So, it is funny in a sense, but it is not funny really," says Anurag Singh , Managing Partner, Ansid Capital I always used to think that India has this art of inflicting self-inflicted wounds along the way, but look here we are, US can do better than that and this is where it is. This is completely self-inflicted. This is totally unnecessary and whatever be the end goal that Trump had in mind that is not happening because even at an elementary level he thought that maybe higher tariffs would result in lower yields and strong dollar. It happened for a bit, but then it did not.So, ultimately exactly the reverse is happening and that is confusing markets, that is confusing everyone. But it seems to be it is very apparent now that people are just…, some capital on the margins is leaving America.So, it is like exit America trade where yields drop, equities drop, and the dollar drops. So, that is how I see. I do not know to what extent this craziness would go but, obviously the president sees that if the market is not responding the way he would have thought the market would respond, he would have to take his energies out somewhere and then that comes out on the big loser guy asking the resignation of the loser guy. So, it is funny in a sense, but it is not funny really.So, if you look at it today, except for China everybody has 10% tariff. So, basically, whatever the damage was inflicted on April the 2nd, April 3rd that has been kind of have a 90-day reprieve. The point is market does not trust.If the president is just all and out there to destroy American companies and American markets, then how can a market trust what multiple to give to the profits and who knows what will happen, what will come out of these deals. So, the entire business community, the economic engine of US is in kind of a stalemate in terms of decision- making.Nobody can decide anything on this. How does a company decide how much to produce, where to import from, how to hire. So, the entire machinery is on a standstill and that is the biggest damage that we see right now and it will persist until we have very clear ramp down from this tariff, until somebody lowers down this this ratchet and takes an offramp from here.I mean let us see, but at least the markets know that the bond market has put a bottom on at least where the president comes in and kind of tries to save the markets. So, at least the bond yields the moment it crosses 4.4, 4.5, I think that becomes a worry sign.So, at least there is some comfort there. But yes, in terms of US market, I still believe that US is actually the place to be. People are talking about money moving to Europe that is a dead end, Europe is not going to perform, you have got to decide where your money is going to be.Europe has not performed for the past 15 years. So, my firm belief is money can go to China, money can go to India, but it certainly is not going to go to Europe.So, eventually US is going to prevail, on the margins I am sure India will do well and so will China. So, I mean India is likely to be a beneficiary although on the margins of the risk off manufacturing coming out of China.So, there will be some benefit, it will not be substantial, but it will be there. Aside of that, yes, India is on domestic engine, domestic economy is doing good, I mean it is not too bad relatively to the world. So, I am quite positive India will do well along with China.So, there is a long-term view on your question, there is a short-term view. Whatever the flow is coming to India, usually the trend is if the dollar weakens, it is at 98.I mean, it was 110, believe it or not like a month and a half back. So, whenever dollar weakens, money comes to emerging market. But this time dollar is weakening for a wrong reason and my sense is Chinese are dumping and even the Japanese are dumping the dollar for the time being on the margins, so that is one reason.You do not see a huge gush of money coming to emerging market, so that is the immediate short-term reason. Long-term, the trend is that Indian market, I strongly believe you can keep counting on the margins, but I am of the school of thought that the peak of FIIs holding in India happened in 12-13 which was like 22%, now it is back at 15%, it might range, go down to 12%, eventually the trend will continue.If there is such a long-term persistent trend, there is no reason that should change overnight. But domestic flow is huge. So, something has to balance out. So, that is kind of my quick take on FIIs overall level of holdings in India. In terms of what to buy, I think we had a great party for last five years on all the kind of non-performers in the economy which is PSUs and manufacturing and what not.I think we need to come back to the core of technology, banking, and FMCG because next three years in Indian market are not going to be rocking returns, they are going to be like 5, 6, 7, 8, 9, 10% returns in the market overall and so this is the time where you absorb the returns you have made for the past five years and build on that.So, in that sense you always go back to those stable sectors which drive the economy which is FMCG, banking, technology, and a bit of healthcare of course which is a rising sector and it is not a time to get into any of these fancy sectors which people tried for the last three-four years.