No value in market, it's time of growth investors; focus on alpha generation in new spaces: Prateek Agrawal
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, MD & CEO,, highlights a period of simultaneous emergence of high-growth sectors , reminiscent of the '90s software boom. He emphasizes focusing on alpha generation in these new spaces, rather than index performance. MOAMC portfolios encompass diverse growth areas like EMS, renewable energy, defence, NBFCs, capital markets, luxury, and new tech, seeking growth opportunities with sensible valuations.: For the Indian markets, the thing to look forward to is to benefit from low oil prices. Government finances could look significantly better than budgeted because lower oil means some bit of gains goes to the population, some bit of gains goes to the government. Government finances look good. Hopefully, either the growth, the spending increases or the borrowing reduces which means further downward pressure on interest rates. So, lower inflation and lower interest rates. We had two rate cuts. We may have two more and that makes it very good for risk asset classes like equity. So, that is the threat to look forward to for India.There are uncertainties, for example will the US do a deal or not? But the direct impact of that at least in the immediate term on India should be very low. We export just about $80 billion in a $4.1 trillion economy and spaces that may benefit if the UK deal is of any guidance are hardly there in the market.We are one economy which is very inward looking and that is a positive in a period like this, where so much is happening in the world. That is what it is for India.Yes, some bit of benefit will go into manufacturing and that is something we like; to airlines maybe. So, that is import parity pricing on cost. If the traffic increases, there would be higher margins, but not for banks, as if more rate cuts happen than anticipated, then the pressure on NIMs will start to manifest itself. NBFCs, yes, for the same reason that their input is money from banks and the cost of that would reduce.We have seen investors still worrying a hell of a lot because a lot of events in the recent past have caused turmoil. The flows into mutual funds were not very strong in the last two months. This month could be an encore. So, it is not all positive.But one positive which is happening and which you missed is a good result season versus what was expected. A 3-4% earnings growth was expected, but we are getting much better earnings growth. So, there are things to fuel the rally forward even if we talk about the immediate term. Weaker dollars, DXY at sub-99 has happened after a long while, and that points to the dollar moving away from the US all over the world and if India sticks out as being slightly better, then we should get some share of that.So, foreigners would also be buying more than usual. Domestics will continue to buy. The IPOs are still some distance away. The big momentum would be some distance away. It is good for the secondary market. A one, one-and-a-half-month period is a sweet spot for the secondary market.Simple, there is no value. If you are hunting for value, this is not the market for you. Hunt for growth. There are two styles of making money, the value style and the growth style. The best of value is behind us. Being growth investors, lower interest rates with continued good growth outlook is a very good combo for growth investing . We think our time has come.Kyoki growth toh hai (But there is growth). This is a period in the life of a country when several new spaces which offer strong growth not for one year but multiple years are all coming up at once. In the '90s, you got software. New space delivered huge growth for several years. In the same light, if we see the last five years and it is happening as we speak, many newer spaces are emerging in the market which offer the same combo. We have been saying this now like a parrot every time you have me that it is not a period of the index, it is a period of alpha. It is a period of these newer spaces where growth and sustenance of growth is of another order versus the index.What we run is portfolios not single stock, single sectors. All the growth spaces find representation in our portfolio. Yes, EMS is there. Yes, renewable energy is there. Yes, defence is there. Yes, NBFCs are there. Capital market plays are there. Luxury is there and more. New tech is there. As for EVs, till now we have not found a name, and so it is not there but that is where growth is. Now, we have to find spaces where growth corrected for valuations make sense, which is what managers do.If you look at our fund house, these are spaces you will find in practically all of our funds. That is the method in the madness of what we do. We are out and out growth investors. We think our portfolios are some of the highest growth in earnings portfolios in the country.
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