Did you anticipate that we will make it back to 25K because start of this week one was wondering that the going cannot get better than this and maybe we hit a ceiling?
Sandip Sabharwal: So, the trend has been bullish only. I have been telling this for a long time now because, see the key in the market is always to evaluate the macros. So, once you get the macros right, then stock-wise you might do well, you might do better, you might pick up some very hugely outperforming stocks or not so much like that, so that is just part of the entire investing journey. So, what we need to realise is that in a scenario where inflation is coming down, interest rates are coming down, government spending is increasing and there is likelihood of improvement in both consumer demand and private sector spending, maybe not today but going forward, we cannot be excessively bearish in this market.
So, we have to use opportunities which the markets gave on any sharp correction, any event-led correction, etc, to buy now because what was happening at the border last week, some of the people bearish went further bearish, increased cash, maybe people went short and this kind of move can be explained largely by that that many of those people might be either covering as the markets make a technical breakout or just buying now in FOMO.The bigger question everyone is toiling with and this is just a learning that you have seen all through October last year up until Jan and then when it got worse up until March end in the market that is this the time to profit take or do you just like ride the wave right now?
Sandip Sabharwal: Directionally I see things being fine, not only domestically but even if, let us say, the global geopolitical tensions, tariff tensions seem to be moderating somewhat. Let us say hypothetically there is some deal between Russia and Ukraine, there is some truce between US and Iran, so the Syria deal could give confidence to the Iranians also that the US could do a deal with them. So, there are a lot of factors which were negative earlier which are turning positive, but people do not want to accept it and that is the main issue but that is fine.
So, people should remain negative and that always helps the markets move up. So, I do not like very sharp up moves like 1000 point, 1400 point like two-three day moves, so I do not like those kind of moves but that is the way market behaves. So, I would think that people who are invested and are confident of the stocks they are invested in they should remain invested. For people who are looking to invest and miss the sharp downturn which the markets provided, so now they need to stagger investments and buy.
Typical of Reliance has been a slow starter. There have been many other largecaps which have given much better returns and shown leadership. Do you think Reliance has further headroom from these 1450 odd levels?
Sandip Sabharwal: I do not think so because the oil to chemicals business performance could have bottomed. We could see better performance coming from the retail operations. Telecom in any case is doing well. And Mr Ambani in his recent comments post results also sounded very bullish on the new energy businesses, new ventures starting off and starting to generate revenue and cash flows.And the issue with Reliance always has been that you do not get free cash flows and they continuously keep on investing in something or the other. Now, how much the stock can move up in my view will be determined by whether they reach some sort of peak investment cycle and start to moderate the investments and first try to generate cash flows from whatever they have already invested.
So, directionally it will still do well and it will still rise because it has underperformed for nearly five years, but how much it can rise will be determined by all these actions which we will need to see over the next few quarters because we have seen this in company like Bharti as the capex peaks and cash flow generation happens and debt starts to get paid off, the rerating continues very rapidly. So, whether that can happen in Reliance or not is something we need to see.
