Latest news with #JigarMistry
Economic Times
10 hours ago
- Business
- Economic Times
Overall situation rosier than expected; we are getting into peace, not war & India is in a sweet spot: Swaminathan Aiyar
Live Events You Might Also Like: Consensus not confident on India's cyclical revival for next 2 years: Jigar Mistry (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel , Consulting Editor,, says geopolitical tensions are easing across several regions. There is de-escalation between Russia and Kyiv, and positive developments in Israel. India-Pakistan and Iraq-Iran relations are also showing signs of improvement. India's economic performance is exceptional. Optimism surrounds India's ability to exceed expectations this year. The overall outlook is surprisingly positive at this moment.I would say that what is happening is astonishingly positive. Just as we thought we are getting into a war, we are actually getting into a peace, and getting out of the war. We have an unusual situation now where there is in effect a ceasefire in Ukraine, Kyiv; a ceasefire is foreseen over Israel and Iran. The Americans have finished off the regime in Iran which seeks no immediate revenge. It wants to survive right now. We had an almost laughable situation where Iran said they will send some missiles to bomb American facilities in Qatar, but informed them in advance, so that everything would be safe and there would be no damage and no at this particular point, when people were worrying about World War III or a nuclear war, the attitude of the Iranian government was 'I just want to survive, I want to de-escalate at this point.' So, we have a situation which is very positive in terms of both Kyiv and what is happening in Israel. Peace is breaking out, in a sense, in both ways. So, a lot of the things that we are worrying about are giving way to pretty positive things as far as geopolitics is concerned. Far from being worst case scenarios, we are moving towards some pretty good case scenarios as far as the hostilities are concerned. And shall we say India-Pakistan also? So, India-Pakistan, Iraq-Iran, Russia- Kyiv, everything is settling down at this particular point. It is a very surprisingly positive outlook right is in a sweet spot. It is more than that. If you look at the actual performance of the last two financial years, 2023-24 growth has been revised up to 9.2%. When that happened, a lot of people sneered and said this is because of an extremely extraordinarily low GDP deflator. But if that was the case, then we should have had just the other way around in 24-25 and therefore, 24-25 should have come the proper thing is to take the average of the two. If you take the average of those two years, it is 7.8%. It is nowhere near the 6.5% that Mr Anantha Nageswaran, Chief Economic Adviser, is aiming at. It is far above at a time when the overall global situation has been very tough. So, I can only say that it is not just India's prospects, India's actual performance in the last two years on the basis of the latest data, looks so exceptional that there is a case for optimism that this year too, we will exceed the kind of targets being put the other hand, the chance of a recession in the USA remains. The other thing that is happening is Mr Trump has persuaded or shall we say forced a new attitude in Europe. The European Union instead of saying we will spend 3% of GDP on defence, will have to aim at 5%. So, the cold war dividend is now gone and all these countries will be spending more on armament. There may be correspondingly less available for consumer demand to that extent and that could be a negative. These are the two medium-term negatives still out overall, India has the capacity to look forward with some confidence that we have overcome extremely difficult situations. Will we be able to overcome the challenges of the coming short recession? Possibly. Will we be able to overcome this gradual fall in consumer demand that we are seeing? Yes. What will happen about Mr Trump's tariffs remains a question. The 90 days deadline for Trump tariffs is coming up. What happens after 90 days? Will the reciprocal tariffs come back? Will they go up? Will they go down?We have a new situation in the USA where some courts are beginning to take note of does Mr Trump have the right as president to declare that on the basis of national emergency, he is going to raise these tariffs across the board? One American court has ruled that while you can do specific things like raise tariffs on priority items like aluminium or steel, but to impose a 10% tariff across the board is not an emergency action. So, let us see what happens. The courts also may be able to stop some of the worst actions that Mr Trump has threatened on the tariff side. We are getting close to that 90-day deadline. Let us see. But as I said, the overall situation is looking much rosier than I would have said one month ago.
Economic Times
2 days ago
- Business
- Economic Times
Consensus not confident on India's cyclical revival for next 2 years: Jigar Mistry
Jigar Mistry, Co-founder, Buoyant Capital, says India witnessed significant FII inflows from March, fueled by a weaker dollar and increased risk appetite. However, the market is sensitive to uncertainty, particularly elevated crude prices, given India's heavy reliance on oil imports. A $10 increase in crude oil prices significantly impacts India's current account deficit and interest rates, creating concerns for equity valuations. For the first time in five years, we are seeing consensus cut earnings in the runup to the next year. ADVERTISEMENT The markets are a little jittery again because of geopolitical tensions. Not only Iran and Israel, now the US also has entered the fray. How do you see the markets playing right now and what is your take on Indian markets? Jigar Mistry: Geopolitical tension aside and I will come to that, until September 24, if you take a long-term CAGR of three years especially in the smallcap index, the share prices were moving way ahead of fundamentals. By February, you had essentially a situation where the smallcap index corrected 25% and that resulted in a reasonably decent equilibrium. However, March onwards, we started seeing a lot of FIIs inflows come through to India predominantly driven by the dollar weakness and that has resulted in the upping of the risk appetite so to speak even within the domestic investors, which again started resulting in a large dislocation, especially in a lot of illiquid stocks. Coming to your question, the market does not really like any uncertainty, especially one which results in an elevated crude movement, and that is where India is really vulnerable. Because we are importing say 1.4, 1.5 billion barrels of crude each year, a $10 up move is a $14-15 billion hit which is more than the money we would have gotten from the bond inclusion which we are trying so hard for. That is a predominant case which impairs India's current account deficit, which in turn impairs the interest rates. SIF vs mutual funds vs PMS vs AIFs: What you need to know Now, if you look at the two policy rates – the US versus the India – then the difference is below 100 basis points, which is the lowest we have ever seen and therefore, anything that impacts India more than the US, which obviously crude price is, has a potentially higher impact relatively speaking to equity valuations and that is where the Street is a little bit worried. Of course, the prolonged conflict which we are at present witnessing, the Israel-Iran tensions and the bigger economy is also interfering now, could stall global growth. But what is the stance for a domestic market like India and where do you see the India play stand – particularly, sector specific approach? At present, if we have to build a portfolio, is India still a buy on dips market and if yes, what are the sectors to watch out for? Jigar Mistry: What is happening is that India so to speak is a macro darling in an otherwise turbulent market. Almost everything was completely aligned for the Indian macro space. The inflation had started to cool off, your current account was in check, fiscal deficit was tracking completely on track with the next year estimates. Therefore, in a world which is increasingly uncertain, India provided a safe haven status. Therefore, incrementally, views were moving into earnings as well as flows. Now, we can handle both of them separately, but earnings in 4Q was a reasonably decent reality check. The only divergence we saw was that the sectors where the weights were higher. They were not contributing as sharply to the incremental pat growth of the free float BSE 500. If you looked at the sectors that contributed, they were cyclical in nature and therefore, despite earnings beating consensus in more companies rather than missing, for the first time in five years, we are seeing consensus cut earnings in the runup to the next year. ADVERTISEMENT If starting COVID, we saw the consensus continue to raise or at least meet with their initial EPS targets two years out, 2021 estimate set out in '19 got met, 2022 got met, '23 and '24 got met', 25 also got met. 2026 and 2027 is where we are seeing the earnings cut through because incrementally consensus is not really confident on whether this cyclical revival that India is seeing will be able to push through over the next two years or not. Therefore, the focus moves to flows and within flows, we did talk about how FIIs are incrementally putting in money. DXY, which is the dollar's gauge against the vast basket of currencies, has fallen from 110 to below 99. If I am a global allocator of capital and I am seeing emerging market versus developed market debate rage on for five years and then shift, I am very weary that the dollar has now started depreciating. ADVERTISEMENT On top of that, I have an incumbent government who is keen on seeing the dollar depreciate even further and therefore, I will be keen to put money into emerging markets and thereby India gets a higher allocation. Within domestic flows, everything said and done, we are only at around 4% of the household savings coming into equities. Ten years back, it was just 0.7%, but in 1992 in the peak of those markets, we were almost 15% albeit the volume was much lower, but even if this moves up to 10% in the foreseeable future say, three-four years from currently 4%, you are talking of 10 lakh crores of incremental flows coming into mutual funds or equities speaking and therefore, despite earnings getting cut, in places where there is a reasonably decent outlook, the valuations are not correcting in the face of apparent construct that we are seeing. ADVERTISEMENT You are highlighting the financialization of the saving trend shaping up in India. Do you believe that to be a part of this particular trend, can someone look at the brokerage and AMCs and have a long way to go even from these levels? Jigar Mistry: For us, that is a slightly different view because so often a good product is a good company. It is a seamless transition like say, I wear Titan watch and therefore, Titan as a company is good. The second generalisation that a lot of people do is because the company is good, it is also a great investment. Our philosophy is pretty much based on cycles and therefore what we pay to buy a business matters a lot to us. Many of these businesses are quoting valuations or when you do a reverse DCF on many of these businesses, you get an implied growth which is in sync with what the markets can deliver. It is not as easy transition but, yes, as a theme it is interesting. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
20-05-2025
- Business
- Time of India
Structural concerns loom despite macro strength: Jigar Mistry
"If I look at Nifty 4Q earnings , they are up like 7-7.5% YoY, but it was almost entirely driven by banks and lending institutions, across the board, especially in the mid and smallcap the earning recovery is absolutely elusive which is a cause of concern for many of them," says Jigar Mistry , Co-Founder, Buoyant Capital . The markets are also looking good because, of late, we are just building on to that gains, believe that the worry around the Trump tariff tantrums as well as the slowdown everything is just abating away. Give us some sense what are you pencilling in for the markets and the bigger question is, is this up move sustainable? Share your thoughts. Jigar Mistry: It is a dichotomous situation if I am being honest because see, clearly India is a macro darling in an otherwise turbulent world. But frankly earnings recovery is very elusive even as we speak. So, if I pencil in what we are looking at from a macro standpoint, then very clearly the CPI inflation is benign in India. We are around 4-4.5%, that looks fairly okay. Secondly, with the crude prices coming off and rupee appreciating, you are arguably looking at a trillion INR in saving from the entire economic standpoint that would obviously get dispersed differently. And thirdly, even the CAD, BOP is fairly stable and that gives you an impression that in an otherwise volatile world, turbulent world, India stands out. However, that is not translating fully into how the earnings are panning out. So, if I look at Nifty 4Q earnings, they are up like 7-7.5% YoY, but it was almost entirely driven by banks and lending institutions, across the board, especially in the mid and smallcap the earning recovery is absolutely elusive which is a cause of concern for many of them. Secondly, if you look at the retail behaviour, that is also very confounding because on one hand there is more money Live Events coming into SIPs, but on the another if you look at the SIP cancellation number, that is at a fairly high number. And when you look at the Demat account and do the analysis thereof, you find that there has been a direct selling that is going on in the retail accounts and the discontinuation in SIPs are the ones that opened in 2021, 2022. It eventually all boils down to flows and not as much fundamentals. If you look at the rupee appreciation, then that means that FII money has returned back to India since about a month or so. Domestic liquidity continues to be high and sadly, a lot of that money is again going into sort of all the narrative stocks which is a little bit surprising. So, net-net I would say flows are strong, earnings have to catch up if we want to sustain at the levels that we are at. While you did speak about the global factors at play and also earnings, but I want to get your broader view on earnings, like about the ongoing Q4 earning season. Are there any early signs of upgrades or downgrades given how the earnings have been so far, any particular sectors that you would like to discuss and help us understand that could see upgrades going forward? Jigar Mistry: So, this all sort of began from April to June quarter last year. Now, obviously with the onset of general elections and given the large scale of that exercise, you started seeing a generic slowdown starting from that point and we have almost completed the year with a single-digit growth on the headline indices. Now the belief system if you look at it like one view of thought is that India pretty much like we saw during COVID, in COVID we did clearly really report a FY20 drop and then in FY21 sort of relay back, very similarly one view of thought is that you should see the current situation in a similar light which is that we do not really see the slowdown in F25 and then do not really talk about the run-up in F26 and we rather look at F24 to F26 and then gauge on which sectors are doing well versus others. With that standpoint, optically speaking F26 should start seeing some bit of recovery starting next quarter itself because April, May, June last year was a wash out quarter, that is one view of thought. The other view of thought is that we have actually entered a structural issue which we need to understand. Unless you start seeing recovery in a lot sectors, it is difficult to believe on where the recovery would come from, that is point one point. Point two, there is some shift even from the policy level in India, so India did phenomenally well to curtail the fiscal deficit from 4.9% to 4.4%, but that has come as by pushing the capex out states, we analysed the past 16 states that went into elections and we have noted that their capex has slowed down to 4.5% negative. Now, centre and state capex and PSU was driving majority of the growth and that might be a little more challenging now.
Economic Times
20-05-2025
- Business
- Economic Times
Structural concerns loom despite macro strength: Jigar Mistry
"If I look at Nifty 4Q earnings, they are up like 7-7.5% YoY, but it was almost entirely driven by banks and lending institutions, across the board, especially in the mid and smallcap the earning recovery is absolutely elusive which is a cause of concern for many of them," says Jigar Mistry, Co-Founder, Buoyant Capital. ADVERTISEMENT The markets are also looking good because, of late, we are just building on to that gains, believe that the worry around the Trump tariff tantrums as well as the slowdown everything is just abating away. Give us some sense what are you pencilling in for the markets and the bigger question is, is this up move sustainable? Share your thoughts. Jigar Mistry: It is a dichotomous situation if I am being honest because see, clearly India is a macro darling in an otherwise turbulent world. But frankly earnings recovery is very elusive even as we speak. So, if I pencil in what we are looking at from a macro standpoint, then very clearly the CPI inflation is benign in India. We are around 4-4.5%, that looks fairly okay. Secondly, with the crude prices coming off and rupee appreciating, you are arguably looking at a trillion INR in saving from the entire economic standpoint that would obviously get dispersed differently. And thirdly, even the CAD, BOP is fairly stable and that gives you an impression that in an otherwise volatile world, turbulent world, India stands out. However, that is not translating fully into how the earnings are panning out. So, if I look at Nifty 4Q earnings, they are up like 7-7.5% YoY, but it was almost entirely driven by banks and lending institutions, across the board, especially in the mid and smallcap the earning recovery is absolutely elusive which is a cause of concern for many of them. Secondly, if you look at the retail behaviour, that is also very confounding because on one hand there is more money coming into SIPs, but on the another if you look at the SIP cancellation number, that is at a fairly high number. And when you look at the Demat account and do the analysis thereof, you find that there has been a direct selling that is going on in the retail accounts and the discontinuation in SIPs are the ones that opened in 2021, 2022. It eventually all boils down to flows and not as much fundamentals. If you look at the rupee appreciation, then that means that FII money has returned back to India since about a month or so. ADVERTISEMENT Domestic liquidity continues to be high and sadly, a lot of that money is again going into sort of all the narrative stocks which is a little bit surprising. So, net-net I would say flows are strong, earnings have to catch up if we want to sustain at the levels that we are at. ADVERTISEMENT While you did speak about the global factors at play and also earnings, but I want to get your broader view on earnings, like about the ongoing Q4 earning season. Are there any early signs of upgrades or downgrades given how the earnings have been so far, any particular sectors that you would like to discuss and help us understand that could see upgrades going forward? Jigar Mistry: So, this all sort of began from April to June quarter last year. Now, obviously with the onset of general elections and given the large scale of that exercise, you started seeing a generic slowdown starting from that point and we have almost completed the year with a single-digit growth on the headline indices. Now the belief system if you look at it like one view of thought is that India pretty much like we saw during COVID, in COVID we did clearly really report a FY20 drop and then in FY21 sort of relay back, very similarly one view of thought is that you should see the current situation in a similar light which is that we do not really see the slowdown in F25 and then do not really talk about the run-up in F26 and we rather look at F24 to F26 and then gauge on which sectors are doing well versus others. ADVERTISEMENT With that standpoint, optically speaking F26 should start seeing some bit of recovery starting next quarter itself because April, May, June last year was a wash out quarter, that is one view of thought. The other view of thought is that we have actually entered a structural issue which we need to understand. Unless you start seeing recovery in a lot sectors, it is difficult to believe on where the recovery would come from, that is point one point. Point two, there is some shift even from the policy level in India, so India did phenomenally well to curtail the fiscal deficit from 4.9% to 4.4%, but that has come as by pushing the capex out states, we analysed the past 16 states that went into elections and we have noted that their capex has slowed down to 4.5% negative. Now, centre and state capex and PSU was driving majority of the growth and that might be a little more challenging now. (You can now subscribe to our ETMarkets WhatsApp channel)
