Global markets doing well but see no exuberance: Motilal Oswal

Global and domestic stock markets may be doing well but they are not in the exuberance zone, says Motilal Oswal, Chairman and MD of Motilal Oswal Financial Services (MOFSL).Speaking to CNBC-TV18’s Prashant Nair, Oswal dissected the argument that excess liquidity sloshing around had lifted all assets globally, and said that only good quality stocks were doing well.Locally, Oswal says that the market had rallied because of a number of factors such monsoon, passage of Goods and Services Tax (GST) Bill and announcement of new Reserve Bank governor. Going forward, the market may need fresh cues to keep running, he adds.MOFSL is seeing growth in all its seven verticals including asset management, private equity and real estate, the company chairman says.Below is the verbatim transcript of Motilal Oswal’ s interview to Prashant Nair on CNBC-TV18.Q: Is it a big liquidity trade around the world which is underway? Individual macros for each market doesn’t matter that much, it is this big gush of liquidity which is pushing all markets higher. I know we kind of lean on the liquidity factor too much but that is true in a way; that is what we are seeing.A: That is what the market is all about. If you look at it in short-term, end of the day we say the market is kind of voting machine that how much money is chasing in, in which kind of sectors. So, sometimes liquidity is on this side, sometimes liquidity can go to that side. So, right now we are seeing across the globe, the markets are doing well including India and of course global liquidity is impacting the market in a short-term.However, I don’t see that there is exuberance you can see on the stock prices because the money is going to the companies which are performing well.Q: From a global standpoint, one sentiment that I pickup is anything can happen because rates are negative, this is unprecedented. Every week we see some country dropping rates into the negative zone, so, you don’t have that handle and at the end of the day it is liquidity and when there is trouble liquidity goes back home and home is the USA mostly, so do you sense that?A: At any point of time, multiple factors will keep on working on the market be it geopolitical, economic.Q: At this point you are sanguine?A: I think so. In India you have seen one of the best monsoons which we have seen after two years. You have seen goods and services tax (GST) being passed, you already have new governor, again a very bright and sharp mind within Central Bank. So, there are a lot of positive things, which have been factored by the market, now let us see whether there is liquidity or whether it is any kind of new reforms coming in from government because if you see even the pace of the government in terms of coming out with reforms is also increasing and I am very hopeful that we will see even better days from a market perspective.Q: In a way they say that when there is no growth everywhere else and there is growth here, the market stands out and that is true. However, you don’t want everything else to be down in the dumps also.A: The global sentiments impact the market everywhere and we are also now part of the globalised market. So, we will definitely get impacted.Q: What is happening at Motilal Oswal, talk to us about that, you are building out into various areas?A: After a long time, we have seen one of the best quarters and if you look at various segments, asset management, housing finance business, private equity, we are seeing a good amount of exits even on our private equity side. Real estate fund -- we are able to raise Rs 800 crore in our third real estate fund. So, I think out of the seven verticals, most of the verticals are much kind of better than what used to be. So, I would say that we are going through a very positive business cycle and market is also helping us.Q: On the private equity side, what is the amount of unrealised gains that you are sitting on, if you were to mark-to-market at this point?A: We will have to work out the numbers but this is going to be a good amount.Q: With a bullish market or a bull market, is the broking business doing well?A: I think broking business is doing much better than what we have seen.Q: If you compare this space to the last bull market, that was something else, volumes were huge.A: Last best results we have seen from broking was in March 2010. After that, broking went through serious slowdown. However, if you look at this year, it is much better than what we have seen in previous two to three years.So, I remain confident that new money is coming in, new investors are coming in and one thing which I have seen, which is good trend is that at least huge amount of retail money is coming through mutual funds rather than directly through the equities.Of course the initial public offering (IPO) also has given huge amount of appreciation and more importantly quality IPOs have come. So, people have made good money even with IPOs.Q: Out of the seven verticals which area are you most bullish on?A: Right now the capital markets are going through very positive sentiment. So, broking which is the biggest and the largest business here, I am quite hopeful that this year is going to be much better than that. Housing finance business, which has entered into third year, we have disbursed already about Rs 2,800 crore worth into only affordable segment; that also is doing very well.Q: What is the book now for housing finance?A: Last quarter was about Rs 2,600 crore, which is growing every month by Rs 200-300 crore.Q: The asset management?A: AMC also is getting good number of money. We have now about Rs 14,000 crore worth of equity being managed through portfolio management services (PMS) and mutual fund both. So, on month-on-month, we are getting good traction.Q: You think growth rates will sustain or it is getting harder?A: For the last couple of months, it has been slowed down but let us see what happens.Q: What are the other verticals that you see traction in?A: Investment banking because that is also function of the market. I talked about real estate fund management, I have talked about private equity, we have talked about private wealth business apart from the brokerage.