Got an extremely listless. We were just chatting about it as to how the range on the Nifty is only getting narrower by the day while the headline number, of course, is not really giving you any reason to complain. Do you sense some sort of fatigue setting in right now in the markets?
Sandip Sabharwal: So, markets are grappling with the fact that the valuations are high but they also see monetary easing down the horizon, so I think that is creating a conflicting pull and push in the markets.On the other hand, we are also seeing huge promoter and private equity sales in the market, so that also is increasing supply significantly.
I wanted your view regarding insurance, if you have looked at that one closely. This morning, we have a couple of initiations that have happened. Jefferies has actually initiated coverage on Go Digit and they are fairly excited about the opportunity there. In fact, interestingly, Go Digit also held its analysts’ meet and the street has come back quite positive from that. Of course, Star Health is something which is there in the health side of things as well. What is your view on some of these non-life insurance plays?
Sandip Sabharwal: Non-life insurance space has been growing decently, especially the growth shown by companies like ICICI Lombard, etc, have been quite strong and that is also reflected in the stock price movements. Non-life has been doing better than life. And I think vis-à-vis the two spaces I think that is the better space to be in.
Just want to get back to the point that you were making about the dichotomy that is playing out in the market and the kind of push and pull because of which the market seems listless right now.
Sandip Sabharwal: Yes, essentially, valuations are high. But the markets also see that there is a monetary easing cycle around the corner, so I think that is creating a push and pull. On top of that, we have huge promoter and private equity sales coming up. Like I was mentioning earlier, nearly Rs 10,000 crores I read in the papers today itself is on offer by various companies, promoters, private equity companies. So, the supply has increased so substantially in the market, I think that the absorption of that supply also is keeping the markets lacklustre and that also raises the question why so many promoters, etc, are wanting to cash out at this point of time.
So, markets are in a zone where there should ideally be some sort of moderation in the markets, but that moderation is not playing out and that has been used by many insiders, in fact, to sell.
But what is your view on real estate? Today, of course, Citi has gone ahead and increased target price on a whole host of companies, right from a DLF to a Prestige to other companies as well. Do you think the cycle is here to stay and the upswing will continue in the real estate names?
Sandip Sabharwal: I think the real estate cycle is quite strong. At this point of time most of the new projects, etc, are being lapped up. The only concern we should have is that as RBI tightens liquidity norms, etc, the credit supply will reduce next year.
So, across the board I think the current valuations of real estate companies reflect a strong momentum in the near term. So, like, in general, I do not expect a very big upside across the board in real estate companies from here on.
There could be specific companies doing well in specific but overall I think the real estate stocks are at pretty high valuations right now.
What are you making of the news flow around the Adani Group? I know traditionally you have not really been a fan, but now reports are indicating that the promoters are looking at selling shares worth about almost Rs 30,000 crore. They are looking at some rebalancing of the portfolio and the listed companies as well. Step in the right direction, you think, immaterial of what the stocks may be doing?
Sandip Sabharwal: From the promoter perspective, I think it could be a step in the right direction because news flow sometimes is difficult to decipher in this group because sometimes they are buying stakes, sometimes they are selling, so what exactly is happening is tough to understand.
But I think over a period of time there was a lot of news flows on them actually putting in and increasing stakes, so that could have led to some leverage at the promoter level, so they could be possibly using this route to deleverage.