Domestic liquidity will help cushion fall: Hiren Ved

As a money manager, would you buy the fall or would you like to wait it out?

So the short answer is that I would buy the fall but I would take my own sweet time to accumulate because when you have an event like this, where the outcome is relatively uncertain, you are not very sure whether you will see an immediate snapback. My sense is that the markets will give you enough time to buy but certainly as a money manager I would use this opportunity to buy but I would not hurry. I would go in slowly and steadily.

Is this risk or is this volatility? Can you decode it for our viewers?

It is both actually. It is certainly volatility for sure; it is not something where I am hoping that this will probably have an impact on two or two quarters of economic activity and probably may have an impact on earnings. But we have seen these kinds of phases before. And I think that eventually, you do come out of events like this. So I think the risk is only that there is no visibility of how deep this impact is going to be over the next one or two quarters. There is an impact and there is no doubt about it. But the impact will be different for different sectors. And you do not know the second order impact of what is happening. People do not travel, orders get postponed, decisions get postponed; you do not know what hits you where at what point in time. I am not trying to be alarmist but it is just that the risk comes from the fact that there is no near-term visibility of when this will settle down and when economic activity will start to pick up again.

Do you think when we do start to see markets stabilise, it is going to be back to that same handful or dozen of stocks that have continued to outperform so far?

Whenever there is uncertainty, people tend to flock towards names where the visibility and quality is the highest. It is only when things settle down substantially that there will be a rotation. So, we have seen one move where small and midcaps outperformed in January and February but it happens in stages; so you may see that they may be on the sidelines for a while, consolidate, correct and once the dust settle downs in a quarter or two, things in the broader markets will probably start to look up again.



What we have seen in the last three days is that FIIs have sold rather relentlessly and domestic institutional investors have really put their best foot forward. Given where SIP flows are, PMS schemes like yours are getting inflows; that is what I have been told. Do you think the fall in a sense will be relatively less for India because crude is down and there is local availability of cash?

Yes, certainly there is domestic liquidity, which will to some extent cushion us. At least in India, there are no reported cases; so I think to that extent, in relative terms, we should be better off. And yes, there are benefits to be had because of lower crude and lower raw material prices for some sectors; so that should be a benefit to us but we are not immune. If money moves out of passive funds, it is going to impact us as well. But I agree with you that there is enough domestic liquidity on the sidelines, which to some extent may be circumspect at this point in time, but at some point in time should come to cushion the fall as well because people are looking at an opportunity to invest at lower levels and I think this opportunity is going to be as good as any that you would want.