Atul Suri of Marathon Trends feels that India will be among the first markets to break out in the near term. He also sees a 15 percent upside from the present highs. In an interview with CNBC-TV18, he discussed the repair job underway in various markets, and India's promising position as a market leader. Thematic sectors, such as defence and electrical equipment, are now being identified as emerging leaders, he said. Edited excerpts:
We are almost at all-time highs, how are markets looking now, is there room for more growth and are we looking at some hesitation and consolidation?
It's not just that India is doing well. If you look at global markets, there is a massive repair job underway and we've been talking about it. A lot of markets are almost breaking to 52-week highs, be it NASDAQ, S&P500, Japan, KOSPI or Taiwan. There is a whole host of markets and this is a repair job of the damage done last year, barring a few countries like Russia.
We had this feeling of outperformance very early in the year, but after that, due to some events, the lustre was lost. The good part is that India has recovered and it will again be among the first of the markets to break out.
There is a lot of different life-time highs and 52-week highs which means that there are no resistances, that there are blue skies. I think that India is getting there and I still feel we have a good 15 percent upside from where we are.
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Most people are sitting on cash and I have been saying for quite some time that please stay invested because I think a repair job is happening in equities after a big pain last week.
The famous line by George Soros that bull markets are built on wall of worries is very true. The excesses always happen but they get corrected. Today, or even last week saw that the breadth was improving, and that I think is very important. So, no euphoria is actually good. Personally, I am extremely bullish and I think that India has opened up for leadership status.
Okay, a 15 percent upside is big, given the rally that has happened until now. What is your thought about this?
I had been saying that Nifty will hit 21,500 on record. It had got a little messy post the whole Adani issue, but I think that India is heading there be it breadth or leadership. I am fully invested, and I don't even have 1 percent in cash.
Where are the leaders now? Earlier, it was the banking sector but what about now?
We realized that, the sector and indices that are constructed are very poor. I'll give an example. The best-performing theme playing out today is defence. But we don't have a sector, it is somewhere in the PSU basket.
So, we created about 40 thematic sector indices. Clearly, there are four or five very big things playing out in this market.
Why I’d like to point out defence is that it is not just doing well this year, it was also one of the best-performing themes last year. There is a very, very big play happening in defence.
Second, not a very glamorous sector is your electrical equipment space. Again, capital goods is a very big universe but if you look at some of the electrical equipment manufacturers, you will find that they're posting very good numbers. Over the last 8-10 years, a lot of companies in these sectors have been wiped out and only a handful are left. So, when the government orders and the infra push is coming, you will find that these names are disproportionate beneficiaries. They are all screaming away at lifetime highs.
Similarly, construction and infrastructure have not moved for over a decade, and they are under-owned and under-loved. And these are very good themes for the larger trend.
I personally prefer to be overweight. Those names, which led us for 2-3 years, the marquee, so-called quality names don't have a trend now. Hotel stocks are another very, very interesting space. Auto is an interesting sector but more interesting is the whole ancillary space, given the electric theme that is playing out.
So, if you thematically look at the market, there's immense leadership. You will notice it in the breadth, which may not get reflected in the index per se, but there are a lot of trends playing out.
You're saying you're not sitting on any cash, and are fully invested. Just put a timeframe to 21,500 on Nifty, how long do you think it could take?
I think the markets will surprise us on the upside. I won't be surprised if this happens by the end of this calendar year, which is just six months away.
The big issue that I'm seeing is the cooling off of commodities. All asset classes were negative in 2022, except one - commodities. And 2023 is just the opposite, all asset classes whether equities, bond prices, or even cryptocurrencies are up, and only commodities is negative.
Speaking of commodities, where do you think crude prices are headed?
I think they are headed much, much lower. Crude is one of the most manipulated assets in the world and a pure political play of egos. In spite of all attempts by the Saudis to cut production unilaterally, crude is still not going up.
This asset class is telling you it wants to go low, and my target for crude is around $65/bbl.
If commodities remain cool, that will be a positive for equities and economies as a whole.
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