Time is ripe for building portfolio wealth

Soaring Valuations ($/bn)

- Reliance Group –245

- Tata Group –303

- Adani Group –122

- HDFC Group - 216

- SBI Group –87

- Bajaj Group –128

- ICICI Group – 96

- Hindustan Unilever –82

- Aditya Birla Group – 72

- Kotak Bank – 52

Note: Current market capitalisation (mcap) as on Oct 13, 2021

From last year, this Diwali 2021, India has scaled up to greater heights and progressed on various fronts. In 20 years from 2015 to 2035, India is getting bigger and likely to be closed to $11 trillion economy from $2.80 trillion now, which is about 4 times growth in next 15 years

Mumbai: Experts are of the view that the ongoing corrections in the market have largely to do with the valuations and it is the reason for the corrections. They also opine that any correction provides buying opportunity for the investors.

Taking to Bizz Buzz, Deven Choksey, MD of KR Choksey firm, says: "Importantly, fundamentals are strong for the market. The ongoing corrections in the market have largely to do with the valuations. People are not doubting the fundamentals of the market. Rather, people are little bit sceptic about the valuations of the market. It is why corrections are happening. Any correction of a particular stock provides buying opportunity for the retail investors. Volatility is bound to be there as there lies underline current money into the market. We are not likely to see money going away from the market. Suppose if there is a pressure of selling at the higher level, then the lower-level buying will automatically take place."

In the short-term it is difficult to comment anything on the market as the market will keep undergoing corrections in the short-term. For the next one year, overall opportunity-wise nothing is going away. Any correction in the valuations might take place. Opportunity-wise, the market remains as solid as one can think about, he said.

Also, Choksey is of the view that it is golden period of this century for building portfolio wealth.

Fast forward, from last year, this Diwali 2021, India has scaled up to greater heights and progressed on various fronts. In 20 years from 2015 to 2035, India is getting bigger and likely to be closed to $11 trillion economy from $2.80 trillion now, which is about 4 times growth in next 15 years.

India is expected to grow at GDP of 10 per cent CAGR during this period and could rise to number 4 position in the global rank, which is behind USA, China and Japan. This is an incredible growth and the position of power in global economy; the scenario so emerging for a

country of 140 crore people, 90 year young then, in 2035, in following 15 years from now.

India's market wealth is $3.5 trillion now and is expected to surge to $15 trillion in next 15 years. Correspondingly the per capita income of people of India will also rise to $6000 from $1500 now, with the growth in GDP and market cap.

"For investors, it is the golden period of this century for building portfolio wealth," he said.

Thanks to series of economic and policy measures taken by PM Modi and Government in last seven years, India is at the centre of attraction of global investors. China plus 1 ask created by global nations has placed India as a preferred destination for investments in globe. India is already in its sweet spot.

The 10 key reform measures and opportunities for corporate India are those compelling reasons for investments by investors. Moreover, the Government has announced 100 lakh crore investment under PM Gati Shakti infrastructure development program by 2025. Building affordable houses, sanitation facilities, and providing water, electricity, gas in every home.

Besides, govt is building Industrial infrastructure – attracting industries under PLI Schemes for making India a manufacturing hub under Aatmanirbhar Bharat. Opening up the core sectors to private sectors is attracting global and local investors in defence, mining, oil & gas explorations.

New Education Policy for attracting global students to India and providing higher education to students - New Taxation Policy for encouraging taxpayers under simplified tax regime - New Agriculture policy of providing MSP and transferring dues to farmers under DBT into the bank accounts, increasing the role of farm cooperatives by promoting 40 new cooperatives in next two years and continued emphasis on increase in agriculture output are some of the game changers in building the nation, Choksey opined.

According to him, financial market regulators in RBI, SEBI, IRDA, PFRDA - Real Estate Regulator in RERA - Telecom and Power Sector Regulators - Regulator for Energy, gas Pipeline - NCLAT courts for Bankruptcy resolutions - NARC Bank for unlocking bad assets of banks - targeting 100 per cent digital economy - targeting digital health records for providing healthcare to the people of nation - targeting national grid for electricity transmission - targeting one nation one election - targeting faster resolutions of legal cases in the court are some of the very important measures which have deep roots in debottlenecking and expanding economic activities in the country and potential for improving efficiency of executions of projects in the country.

He feels that privatization and monetization of PSU and government assets are laudable steps taken by the government. Enabling provisions in laws have been introduced to ease the process of divestment of PSUs. The biggest success is Air India's privatization which will save about Rs7,000 crore of yearly losses of the Govt and taxpayers money - over 6 Lakh crore of non-strategic assets are identified for selling them to private sector by 2025, will significantly result in attracting global and local investors. GDP growth could accelerate in the near term before stabilizing at 10 per cent for the decade.

India currently houses the 3rd largest startup ecosystems in the world, with more than 30 starts up already achieving unicorn status, i.e. valued above $1 billion. India has more than 50,000 startup companies, which employ about 470,000 people. The market capitalisation (mcap) created by these start ups is more than $ 300 billion.

India is Choksey said, set to become fifth largest capital markets of the world by 2024 with market value exceeding $ 5 trillion by 2025. The market wealth is likely to grow by 50 per cent in next 4 years, giving visibility of 25 per cent average return per year. The market cap as a currency is expected to significantly increase the number of investors into the country. Less than 4 per cent of India's population invests in India's capital markets and the number is expected to go up to 10 per cent in next 5 years.

Accommodative Monetary Policy of RBI - disciplined and controlled borrowings by the Government despite of pandemic led disruptions of economic activities - higher inflow of funds from domestic and global investors resulting in forex reserves climbing up to more than $ 640 billion - measured depreciation of INR against dollar balancing the exports with imports - Efficient and enhanced agricultural output of more than 300 MMTA last year and resultant lower costs of food inflation - despite of higher energy and commodity costs lower inflation - higher tax collections from direct taxes and GST, etc., have significantly resulted in keeping the cost of funds lower and it is resulting in higher investments in the economy.

"With economy heading into $10 trillion GDP in this decade, India is expected to be a capital account convertible country before 2024-25, which would further lead to accelerating growth in the economy under liberated dollar inflows," he said.

India's top 10 promoter groups, have scripted a sustained growth program for next 10 years, which will scale them to a global size. At present, the total market cap of top 10 Indian promoter group companies is: $1.4 trillion which is 40 per cent of India market cap today. It is expected to grow to around $10 trillion, assuming they grew their business at two times the GDP growth, i.e. at 20 per cent CAGR in next 10 years, he said.

Given the size of growth in India's capital markets, investors hold the prospect of growing their wealth at 20 per cent CAGR in next 10 years i.e. Rs1,00,000 invested today could grow to 15,50,000.

"We see a good long term opportunity for investments in select businesses. They are: Life Insurance | Consumer banking supported by fintech - digital tech companies who are transforming businesses into new age enterprises - IT companies with focus on digital solutions - R&D driven API business in pharma and chemicals - consumer-orientation with D2C approach in sectors like auto, FMCG, FMEG - ESG compliant businesses in energy and materials - Impact making startups etc, can be carefully analyzed and invested as well," he opined.

Giving a small word of wisdom and recommendation to investors Choksey said: "Given the speed at which businesses are changing, it is recommended that you invest only after a thorough research and taking professional advices that too of a well qualified and seasoned advisors before and after investing. Don't fall pray into the trap of free trading and tips."

Second, when investment is made directly by you into the equity or when invested through MF, ETFs, PMS, etc., it is advised that portfolio be regularly reviewed and monitored in consultation with financial advisor, he added. It is highly recommended that the investor does a thorough and, planned allocation of capital in building the investment portfolio also for measuring the risk, he said.