For the Indian bourses, 2021 was a spectacular year. Highlighting the important role that a big IPO market played in that journey, Nilesh Shah, Managing Director, Kotak Mahindra Asset Management, tells Outlook Business that today, India is in a ‘very solid’ position. Edited excerpts from the interview:
The markets have given phenomenal returns in 2021. But, we’re seeing a correction from October’s record high. How do you think they will do in 2022?
We remain optimistic. After a rally of almost 100 per cent, a 10 per cent correction is reasonable. Compared to the rest of the world, India is in a very solid position. The economy has transformed on a variety of parameters whereby business growth is likely to continue. Yes, the markets will go up and down but equity will give better returns as compared to any other asset class in 2022.
Over 60 companies made their stock market debut in 2021, making it the year of IPOs. How do you see the IPO market in 2022?
It has to be multiple times bigger than what it was last year. When unlisted companies are getting a lot of money, the IPO market has to take off big time so that those companies get an exit. Otherwise, they will all fly off to Singapore, the US and other markets. So, we need to deepen our IPO market. SEBI has taken a lot of steps to develop it.
Do you think the LIC IPO should have been listed before the Paytm IPO, considering the latter’s debacle?
The government needs to mobilise its marketing. You can attract the highest number of Indians to the LIC IPO. It matters how you position LIC in the market, excite LIC agents to sell the IPO, bring policyholders into the IPO fold and also attract foreign portfolio investors. No matter what the market is like, LIC will be able to raise capital as long as it is marketed properly.
What do you think of cryptocurrencies as an asset class? What sort of regulations do you think are required in this space?
First, how do you analyse crypto? 30 per cent of Bitcoins today are unaccounted for because they have reached accounts where the servers have crashed. Now, you know that those Bitcoins are non-tradable and non-traceable. Second, if you’re trading cryptocurrency, the transaction charges are between 15 and 20 per cent for a two-way trade. How can you make money then?
My recommendation to investors is that if you want to invest, please do proper safekeeping. The mindset with cryptocurrency is that there will be someone willing to buy it at a higher price tomorrow. That mindset allows it to appreciate. The day that reverses, everyone will become a seller.
The IT sector has surged more than 50 per cent in 2021. How do you think it will perform going forward?
IT will do well and outperform the benchmark indices. The (high) growth rate has come ahead of expectation. Accenture, a $50-billion giant, is talking about some 22 per cent growth. That is a $12 billion turnover. That shows the potential. Accenture’s 50-60 per cent staff is based in India anyway. Indian IT companies have a better growth rate, a better future and they will do well.