On the journey of Sensex over the years
Navneet Munot: I knew the market when Sensex was 400. Nifty was not there. We have seen the journey from 400 to 4,000, 4,000 to 40,000, and 40,000 to 80,000. And during this period, there would have been many quarters where we discussed something like this, why soaps are not selling or why the IIP is lower or the rates have gone up or inflation, many things in the world, many things in India. But in the same period, we have seen the journey of 400 to 80,000.
We have the HDFC Flexi Cap Fund, which is celebrating 30 years of existence next month. During these 30 months, if somebody did an SIP of Rs 10,000 per month, it will be worth almost Rs 20 crore today. Now, I am from the mutual fund industry. As a responsible fund manager, I have to say mutual funds are subject to market risk. Please read the offer document carefully, because I am giving you the past data and they may not guide where the future would be.
But what it shows is the compounding story India has. There are very few globally. Other than United States, there are not many countries on the planet Earth which have done something like this where an economy is growing consistently at a very decent pace, nominal GDP growth of 10-11% over 30 years, you have a corporate sector which can convert that growth into their revenues and profits and you have a capital market where those profits get converted to the return to the minority shareholder. Then there is the mutual fund industry which delivers those returns to an investor who invests only Rs 500 per month. This has not happened in many places.
There is no reason to believe that the next 30 years would not be as exciting. There would surely be several quarters like this. It is not linear, that is the nature of the beast. There will be those bubbles. Those will burst but that is the nature of the beast. But between that, the real trick is just staying invested and reaping the benefit of the growth prospect that India has.
Let’s assume that this cycle was born in the throes of COVID – it started in 2020 or 2021. Every bull market has an age. It follows, it mounts the wall of disbelief, then there is participation, then there is excitement, then there is bubble, and then there is a burst. Where are we in this bull market cycle?
Navneet Munot: No, I think we are seeing a cyclical slowdown. I do not think it is structural, maybe for a variety of reasons. I am sure several other speakers would have talked about it. Maybe the urban consumption has moderated from the growth that it had for a variety of reasons, including maybe the intended tightening of lending to households, particularly the unsecured lending that may have some consequences. Some people are saying, I really do not know whether there is a correlation, but the money that has been lost by retail traders in the F&O market maybe that could have got into consumption because that got probably concentrated in a few hands and they are not spending much. Wherever they are spending on a house in South Bombay or a luxury car, I think those markets have been doing well. Because of the elections, the capex slowed down a little. Once you see those orders and the other things fall in place and now with maybe the inflation easing, if we get lucky, the monetary easing cycle starts. I feel very positive about the next year. There are challenges in the world, the kind of transformations, the pace of change is accelerating, whether it is geopolitical or technological – whatever is happening in the world of AI – all of that will have massive repercussions. India has always come out well and I do not see any reason not to.