Nilesh Shah: So, undoubtedly, asset allocators will try to sell what is expensive and buy what is cheaper. There will undoubtedly be those movements. Now, if we look at India’s position, my feeling is that investors will look to buy into corrections.
Let’s look at it from a foreigner’s point of view. The foreigners are today either equal weight India or marginal underweight India. There is a reasonably good chance that India’s weightage in the MSCI Emerging Market Index will go up. This will make many foreigners underinvested in India. Can they afford to remain underinvested in a growth market like India? The answer is, undoubtedly no.
So they will be using corrections as an opportunity to invest. In every single IPO coming out of India, OFS coming out of India, we are seeing foreigners looking to buy and compete with mutual funds aggressively.
Now let’s look at domestic investors—Insurance, mutual funds, pension funds. We all will be buyers of India’s growth story. Let’s look at retail and HNIs. People, who are expressing bearishness in the market, are ultimately looking to buy at correction. So overall, my feeling is that corrections will be bought into.
This time, investors have also become mature. This is a real life Lagaan movie being played out. As you know, in the Lagaan movie, the local team defeated foreigners. In Covid time, we saw a one day international being played out, where foreigners were selling for March, April, May, June, July 2020. They sold close to Rs 70,000–80,000 crore cash equity. Retailers via mutual funds, kept on buying.
Then, the foreigners realised that Lagaan mein jeetna mushkil hai. So they started playing a test match. From Oct. 21 to June 22, they sold Rs 2,50,000 crore worth of equity. Retailers kept on buying, slowly and steadily. Finally, foreigners realise that retailers are going to win test matches also. So they gave up on the test match format and came into T20 format. On the election result day, they played like T20 and sold about Rs 21,000 crore in cash and about Rs 7,000–8,000 crore in futures. Retailers bought into that too.
So my feeling is that there is a real life Lagaan being played between domestic investors and global investors, and everyone will be looking to buy into correction. Now, someone may buy 10% correction, someone may buy a 20% correction, but every correction will be bought into by local and global investors.
