Indian markets are in midst of global quagmire: Harendra Kumar, Elara Sec

Equity markets are in a state of suspended animation - it is conflicted on which way to move. While global markets, and the rupee are flashing red signs, India is holding up due to its 'Atmanirbharta

As global markets roil under mounting geopolitical tensions, and macroeconomic uncertainties, HARENDRA KUMAR, managing director of Elara Securities tells Nikita Vashisht in an interview that India is holding up due to its ‘Atmanirbharta’. He expects 2023 to be a big year for markets, and sees mid-teen returns in Samvat 2079. Edited excerpts:

What is your assessment of the markets right now? Are the risks getting stronger?

The markets are in a state of suspended animation - it is conflicted on which way to move. While global markets, and the rupee are flashing red signs, India is holding up due to its ‘Atmanirbharta’. Indian markets are in the midst of a global quagmire - which is getting priced in on a daily basis. It would be erroneous to assume that the markets are ignoring the risks. Markets are indicating that lower growth is fine for the short-term in an uncertain world - which in a way is a premium. That said, new risks would emerge only if crude oil prices move up beyond the current range assumed by the consensus.

Has risk aversion crept into retail investors' psyche with growing concerns of market correction?

No, rather we are having our own ‘Robinhood’ movement where retail investors are short-squeezing big institutions, and subsuming all the selling. The SIP (Systematic Investment Plan) inflows have been robust - which tells us that retail investors are quite sanguine of the future growth of their investments.

What investment strategy would you suggest for this market?

India is emerging out of a deflationary earnings cycle with many sectors seeing tailwinds on account of a cyclical recovery plus additional momentum of post-Covid demand. Banks, Automobiles, Telecom or discretionary areas such as travel and tourism will see a multi-year cycle. Defence and Infrastructure stocks are seeing good traction in the order book, and are still at ‘value’ levels. We are not tempted to trade a ‘bounce’ in tech and metal stocks.

How has Elara's business been in 2022? Has the market volatility affected business volume?

Our business model is aligned to the macro story of rising financialization of savings and that structure is unaltered and, in fact, going strong. We are expanding aggressively in newer markets, and are adding new products to our already extensive product suite.

Do you expect better business activity with primary market activity picking up?

The IPO, and primary market segment has its own cycles of boom and bust. The market is in a lull at the moment, but will likely pick up. Calendar year 2023 is going to be big as pessimism takes a back seat.

What is your market outlook for Samvat 2079?

Historically, a global meltdown of this magnitude has been followed through by an Emerging Market rally. We will see an influx of flows, and the rupee will likely see its interim bottom. We expect mid-teen returns in the next Samvat.