Managing Partner, Ampersand Investment Advisors

Rahul Singh

Managing Partner

Ampersand Investment Advisors

Thematic (Sector/Industry)

India Financials / Thematic (Sector/Industry)

<p>Investing in Indian equities does feel like Indian cricket team performing on domestic pitches. Some of the movements and stock appreciation especially in micro and small caps is typically driven by domestic flows (and not FIIs), and reminds us of batsmen with average technique scoring big runs even as the accomplished ones (read quality midcaps) score even bigger (read get more expensive). This is not to say that the quality midcaps have not weathered demonetization better (akin to an odd session or two with overcast conditions). But by and large, sun has been shining, pitch is favorable and crowd support (read domestic flows) partisan.</p><p>We might see the tussle between FIIs and DIIs resulting in sideways or consolidation phase, especially as corporate earnings have still not fully digested demonetisation (impact likely to sustain in Q4FY17). However, anecdotally we see a lot more allocation of domestic savings to equities as investors cut back on real estate investments and/or debt instruments. We thus see strong support to this rally over 6-12 months and any correction will not be very deep. We also take a quick look at the new kids on the block (infact now all grown up) in the space of financial services conglomerates – IIFL and Edelweiss.</p>

Investing in Indian equities does feel like Indian cricket team performing on domestic pitches. Some of the movements and stock appreciation especially in micro and small caps is typically driven by domestic flows (and not FIIs), and reminds us of batsmen with average technique scoring big runs even as the accomplished ones (read quality midcaps) score even bigger (read get more expensive). This is not to say that the quality midcaps have not weathered demonetization better (akin to an odd session or two with overcast conditions). But by and large, sun has been shining, pitch is favorable and crowd support (read domestic flows) partisan.We might see the tussle between FIIs and DIIs resulting in sideways or consolidation phase, especially as corporate earnings have still not fully digested demonetisation (impact likely to sustain in Q4FY17). However, anecdotally we see a lot more allocation of domestic savings to equities as investors cut back on real estate investments and/or debt instruments. We thus see strong support to this rally over 6-12 months and any correction will not be very deep. We also take a quick look at the new kids on the block (infact now all grown up) in the space of financial services conglomerates – IIFL and Edelweiss.

Motilal Oswal Financial Services (MOFS IN)

Mahindra & Mahindra Fin Services Ltd. (MMFS IN)

Ojas Asset Reconstruction Lmited (OJAR IN)

Cholamandalam Investment and Finance (CIFC IN)

ICICI Prudential Life Insurance (IPRU IN)

Tigers on Domestic Turf - Feb 17 Newsletter