Anmol Das of Teji Mandi

The banking sector will keep performing for the next 1-2 years, with the earlier undervalued banks from both private and PSU packs getting higher valuation ratings in the market while they keep on improving their asset quality before it peaks for them individually, says Anmol Das, smallcase Manager & Head of Research, Teji Mandi in an interview with MintGenie.

Edited excerpts:

When did you start investing or trading in the equity market? What inspired you to enter into equities?

I started trading in equities almost a decade ago, right after my B. Tech. (Engineering). Well, my father had some equities investments and had asked me to look into them. I found it very engaging as I started making changes in his stock portfolio and made some positional and intraday trades at the sub-brokers office.

After that, the more I listened to business news channels, the more it felt inquisitive, especially considering neither I nor anybody in my family had a finance background. Later next year, I went for an MBA in finance and interned in Portfolio Management in equity markets to start my career.

Despite the global equities not performing well, India has outperformed the other emerging markets. What are your views on it?

India has been like a lone star shining among all major markets, and we expect this to continue for the next several years. This is because global markets touched new highs on the back of both high liquidity in the system and immensely high valuations for a few sectors, especially the likes of tech-heavy indices and markets, as happened in the case of the NASDAQ and Shanghai Composite Index.

Indian markets with high weightage of the financial sector were going through high COVID-19 provisioning. While other sectors started peaking off their valuations, India’s banking and financial sector only started its rally afterwards, providing support and picking up the benchmark indices over the last year.

Your favourite sector of the year, and what returns have this sector delivered in 2022?

I have tracked the BFSI sector for several years in Institutional Research. The PSU Banking space has definitely outperformed among all sectors this year, rising by around 70% on a YTD basis.

What is the sectoral outlook for next year?

The banking sector will keep performing for the next 1-2 years, with the earlier undervalued banks from both private and PSU packs getting higher valuation ratings in the market while they keep on improving their asset quality before it peaks for them individually.

Already we have seen higher valued private banks with a larger proportion of retail loans mix in their portfolio being downgraded due to rising concerns of diminishing NIMs under the context of multiple rate hikes by RBI increasing their overall cost of funds.

Among other sectors, I believe auto, IT, infrastructure, capital goods and FMCG will perform well next year, with high chances of hospitality space taking up the limelight among sectors.

Which stock has outperformed/underperformed in this sector?

Among the PSU banking sector, most smaller PSU banks have given up to more than 50% returns on a YTD basis. However, the Bank of Baroda has given 127% returns on a YTD basis outperforming all other large PSU Banks.

What new year resolution should new and young investors adopt to bring investing discipline in themselves?

Young and new investors need to follow these few approaches to investing:

Return expectation as per time horizon: Last two years of the pandemic market rally have led to faster wealth creation against historical averages. However, this may not be the case going ahead now. Hence, new investors need to figure out the kind of returns they can expect from direct exposure to equity markets while staying invested for longer terms to normalise their returns.

Avoid over-hyped stocks and new-age companies coming with IPOs: The market is generally considered the best barometer of a company’s business evaluation. Hence, if stocks of IPO companies or come alive stocks have slid drastically this year, there must be very high risks to their business models that have led to a more than 50% decline in market values. So, we suggest avoiding them.

Stop trying to be the expert if it’s not your domain: We have come across several youngsters who do over trading, sometimes intraday trading and derivative exposures, later losing on big chunks of their capital. Neither charts-backed trading nor Quant-based derivatives are such easy concepts that without proper knowledge, one should take such unnecessary risks. Instead, follow investment advice from your brokers, and follow a disciplined and much safer chance of making healthy returns.

Disclaimer: The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.