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DIIs may not be able to make up for the FII selloff: Jaideep Hansraj, Kotak Mahindra Bank

Three or four big events are supposed to play out over the next three to six month, says Hansraj.

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Last Updated: Nov 01, 2018, 04.30 PM IST|Original: Nov 01, 2018, 04.30 PM IST
Jaideep Hansraj, Kotak Mahindra Bank-1200
For next 60 to 90 days, markets would be volatile and would move southwards, Jaideep Hansraj, Head, Wealth Management & Priority Banking, Kotak Mahindra Bank, tells ET Now.

Edited excerpts:

How would you describe the last 2-3 months?

It has not been easy at all over the last 2-2.5 months with equities being volatile. It has just not been the easiest of times at all.

But you guys have been ahead of the curve both in August as well as September. Are you getting clarity as to where the equities markets are headed?

The right call had been what one did in the third week of August and then repeated that somewhere around the third week of September, putting underweight calls in equity. They worked out reasonably well. There are enough debates happening internally. Is there any merit in trying to reverse at least one of the underweight calls which one took in August and September?

Having said that, still a lot of thought is going on internally on three or four big events which are supposed to play out over the next three to six months. One is not going to be an investor for buy today and sell in the next 30 days, 45 days, 60 days or something like that. Obviously, one needs to look at the longer horizon.

The event to remember is how would the Iran issue play out in the first week of November because that will have repercussions on oil markets.

One should also look out for the five state elections which are scheduled from second week of November and ending with results coming out in second week December. Of course, the mother of all the general elections schedule is sometime around Q2 of calendar 2019.

Plus, oil is a the big issue today, moving in the $75-80 range, having touched $85 at one point of time. How is that going to pan out? The currency is still floundering in Rs 73-73.5 levels. It is actually a combination of a lot of things and as you mentioned, global markets have started coughing and sneezing. It is not an easy decision to take. We took the call that we were looking at weakening macro in a very big way. It has played out well for all the set of investors who have adhered to that call. We will still wait and watch and take a call on what to do.

What are data as well as your gut instinct telling you about the way equities are headed? 2017 was a dream year but will we even get back to where we were in March?

The correction in midcaps has been far sharper than in largecaps. At the same time, with US interest rates rising and Indian macro looking weak, you have got reasonably large sums of money being pulled out of Indian markets by FIIs. How they are going to look at it is something which only time will tell.

How are the domestic mutual fund investors and the HNIs going to look at the domestic markets is again a tough question. But if I have to put a gun on my head for the next 60 to 90 days, I would say that markets would be volatile and would move southwards rather than northwards.

There has been an acute FII selling and month to date, it is a mammoth $5 billion. Do you believe that DIIs will be able to make up for the FII selloff or not quite in the current environment?

Not quite. Having said that, I firmly believe that the equity investment piece is getting bigger and bigger in India. The SIP numbers are getting better and better. I would never advice anyone to move out of SIPs and what have you. Some portion of whatever is happening on the FII outflows can be taken care of by domestic mutual fund investments but not the amount that one has seen in October.

Also Read

Karvy mess an isolated event, not a systemic failure: Jaideep Hansraj, Kotak Sec

Fresh money is staying out of equities, HNIs keeping their powder dry: Jaideep Hansraj, Kotak Mahindra Bank

Most ultra HNIs are below 40 in India: Jaideep Hansraj, Kotak Mahindra Bank

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