More than the economy, we have a problem in the financial system today. The single-most problem that we are all living with is trust issue. Till that is not restored, no amount of work can be done, said Sanjay Dutt, director at Quantum Securities.
Sanjay Dutt, director at Quantum Securities is of the view that there is phenomenal opportunity in the market and that investors need to look at that rather than be obsessed by these 5-10 stocks, which take the index up or down.
Sharing further details on where this opportunity lies, he said, “ For the entire B group and the smallcap (excluding the A group), the marketcap at this point of time is Rs 9.2 lakh crore and the marketcap of Reliance Industries Ltd (RIL) alone is Rs 9.9 lakh crore. So it clearly shows that we have a problem somewhere. Markets are totally disconnected from realities."
"Therefore, it is impossible to believe that 8,000-9,000 or 5,000 companies, all doing business in the same country total up to a marketcap of Rs 9.2 lakh crore versus one company on one side, which is Rs 9.9 lakh crore. So it shows that there is phenomenal opportunity in the market," he said in an interview with CNBC-TV18.
According to him, the big theme over the next two years is going to be public sector enterprises. PSUs have been beaten down to nothing but it is matter of time before they will get re-rated. There is immense value there, he said.
When asked about the auto space, he said, “The feedback that I get from the channels is that the excess inventory has been pushed out, it has come down substantially but one cannot say that demand is going to come up and things are going to be gung-ho from next month onwards." It is possible that there are early green-shoots but would still prefer to wait a month or two or maybe a quarter to see auto stabilising, he added.
"Early signs are there so for people who want to take a risk and be bold and catch it early, maybe they could take a call. I won’t be surprised if the numbers are down next month again,” said Dutt.
According to him, one can find opportunities across the sectors – there are good quality companies in consumption, in pharmaceuticals, in infrastructure construction, banking and financial services.
On telecom space, he said, “Reliance standalone is an excellent company, excellent investment but till one doesn’t get clarity on how to take a telecom exposure on Reliance, I think the only option left is Bharti Airtel right now or for some real brave people there is Vodafone and i am one of those."
On the financial side, he is not upbeat on Yes Bank, he said.
When asked about the possibility of the goods and services tax (GST) rates going up, Dutt said, “The fact is that when the corporate tax rates went down, we rallied for two days and we forgot about it. We never realised that that was the seminal change that happened in Indian macro and corporate history but the market forgot about it and we moved on. Yes, economy has a problem, we do have a problem, GST rate tinkering happens, go up 2 percent here, 3 percent there but is that going to change consumption anywhere? It is not. It is going to change for about a month or two or three months, we will absorb it and move on. I am not going re-balance my portfolio based on GST rates but would look at much deeper fundamentals and other important issues that are going to reflect on my portfolio for the next two-ten years.”
“My view is going to change when I see some fundamental shifts happening. If the GST rates goes up 2 percent on something, goes down on something, it is not going to impact me in my portfolio as such. It will have a short-term impact," he said, adding that fundamentally, if we have a problem in the economy, we need to sort that out.
"More than the economy, we have a problem in the financial system today. The single-most problem that we are all living with is trust issue. There is no trust in the financial system. Till that is not restored, no amount of work can be done,” he further mentioned.
RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.