It has been a considerably accessible market, but lately the FII sale is getting a little bigger and although there is Dii support, the Nifty range is lower every day. What do you think is the care point for the market?
Gurmeet Chadha: Three-four things are worried about the market. One is this uncertainty. The market can praise risks and, if the event is over, it should be able to praise. The TariefdeAdline now weighs on the market, because we have heard the first week since July that we will have an interim deal, and then there was news that there will be no deal and we will have rates and an extensive deal will happen somewhere in September or October. So there is a bit of uncertainty there, and that is why the export -sensitive sectors have underperformed the market. Whether it is a car, textile or something that is more global supply chain, especially in the US -targeted performance.
Secondly, we have seen that other countries such as Japan, China get some deals and have been a bit of a break. Then there was a deal with Indonesia, which also means that the tactical money, the short -term money continues to jump from one emerging market to another or some other markets where trade agreements take place. So there is a bit of a tactical movement here. I don’t think we should read too much in the FII sale, because that usually happened after the trade agreements have been postponed and the income was also very soft as was expected.
For example, Kotak was disappointing because the Q1 update was very good. For IT companies, the commentary has been much weaker than what the market thought it would be and the news of dismissals did not help things. It is therefore a combination of all these factors and in my mind in the coming days are important from a direction point. We have a Fed FOMC meeting, the shredder of the decision today. We have great technical income in the US and the first rate line of Augustus. So too many things happen, but the good thing is that it has largely been suspicion. If the figures are good, wherever the news is positive, the market rewards it.
Yes, that’s it. And look at L&T, another strong quarter in terms of the order intake for them. The income is consistent, margins in line with last year and more importantly, the comments. L&T is a company that gives color how the economy goes. We finally see that meaningful move on L&T.
Gurmeet Chadha: Yes, a long representation and this is a stock that has not really participated as it does in larger bull runs. What I liked about L&T different from the orderbook is the good version. The net working capital has finally fallen to 10.1%, just like their aim for the last four five years when they launched their five -year plan called Lakshya. So the net working capital that comes down with more than 300 basic points is extremely encouraging. The orders of the Midden -East will also surprise the benefit. They get a number of very large orders from the Middle East about the spectrum, hydrocarbon, water and then there will be a GCC-related headwind for them.
The only thing is that if you see the order mix, the government is still good for 75% and the private sector for 25%. I would like the private relationship to be improved. As soon as the book of the private sector has been picked up, there will probably be a greater revaluation. L&T has a lot of value to unlock at a certain moment. We will see that in the coming years. It is part of our core portfolio and probably one of the stronger larga caps that should do well in the next two-three year.28 From the Nifty 50 companies, their number has been released, of which seven are lower and only six are a beat versus estimate to date. What is your broad sense of the income we have seen and what are the prospects for the rest?
Gurmeet Chadha: That is where the greater care is. Fii streams will come and go, but if you see the pin now, if we are income 21 times and earn growth is 7, we are pinned about three times and that is expensive. I don’t think FIIs will allocate money there. So as soon as we earn a 12-13% growth, it is when it will fall under 2. Even the price book is above 3, which is also somewhat on the higher side. As soon as we see meaningful changes there, we have a persistent meeting. Otherwise the news about rates and some decisions can be 5%here and there.
For a long -term move, to break out of the previous high, we need good profit growth and that is why I say that this is a more difficult year and it is very important to have the right balance in terms of asset spreading. The focus must currently be more preservation and to get into good shares where the income is strong. One should not pay too much and continue to look at other events such as gold, precious metals, raw materials, even fixed income. We will see ourselves starting the rates. More movement is happening in terms of bond returns and even long -term bonds can yield a good return. So be more balanced and at the same time, when you pluck stock, you must anchor where the income is extremely strong.
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