where to invest: I did not take money from the table, I transferred it to REITs: Ajay Srivastava

“It is economic policy more than the flows that now impact India. But I hope the public of retail investors will keep the faith, ”says Ajay Srivastava, CEO, Dimensions Corporate Finance.

How intact do you think the market’s bull run is? After 18 months, for the first time, we saw the Nifty see a 9% correction?
Longer term, the bull market is still intact for the simple reason that there is more money to invest than people who want to sell stocks. So put aside the fundamentals of the economy, put everything aside, the fact remains that there is more money in the Indian and global markets waiting to be invested rather than divested and we will see. pockets of exuberance. We will also see pockets of fear. We had exuberance in October. We are afraid in December. We’re going to be alternating, but the key here is where the flows also come from and that’s what dictates the markets.

Today, the Indian market is mainly based on retail purchase. Ultimately, that’s what the market is. IPO is institutional buying, the secondary market is retail buying. So the stocks of FII languish until the purchase of FII does not come. Fundamentals, outside of flows, become just as important. When you pursue a long policy of low and regressive taxation on oil, it eats away at consumption. It appears in the offset. He has now started to appear.

The government is reversing politics and I keep saying that electoral uncertainty for the ruling parties is very good for the markets because they will do what they do now. So if they make oil more reasonably priced, consumer buying will come back and the economy will come back. If the policy continues as before, taxing petroleum which is the lowest level for all consumptions, you have a problem in hand. Pockets of problems remain. The GST on clothes and shoes of Rs 1,000 has been reduced from 5% to 12%. It is still a regressive policy because you are hitting consumption at the lowest level. I think it’s more economic policy than the flows that are now impacting India. But I hope the retail investing public will keep the faith.

You said there was fear in December. When there is fear, the money leaves the market. What do you sell when fear sets in?
At the moment, we are not selling anything. Everything we wanted to sell, we sold. We are not in the banks right now. We are not in FMCG actions at the moment. We are primarily responsible for economically oriented stocks including metals and commodities at this point. Despite the correction, we are buying more at the moment. Whatever liquidity we took off the table, we switched to REITs and it worked remarkably well with very stable and good returns.

Fortunately India has a few REITs which are great and the move hasn’t been out of the market, the move has been pure risk assets in FMCGs, banks etc. towards assets like REITs which are a little more stable.

What Kind of Returns Can You Expect from REITs? Is this an important asset allocation that everyone should be considering now?
You should be looking somewhere around 10% return. Of course Indigrid has given a much better return at this point and even Power Grid if it continues with a dividend of Rs 6 it should give a much better return which means an investment of Rs 24 out of Rs 120. is essential for the Power Grid REIT. But I think a 10-12% return and about 10% year-over-year appreciation is going to happen in the asset because those companies are going to use leverage as well.

Indigrid is already buying more assets and we can get leverage. More importantly, after-tax returns are much better because what they do is when you get the quarterly money some of the money comes as a return or principal and is not taxable. Thus, the effective post-tax seal also increases considerably.

Which REITs have you invested in?
Our largest exhibition is at the

and KKR IndiGrid REIT – both from the private sector. We have invested more money around these REITs rather than real estate. In real estate, we have investments in Brookfield because I think it will work out well. But the best returns come from IndiGrid and PowerGrid REITs.

So when we look at REITs, let’s not limit ourselves to real estate. Indian power grid REITs will be much better in the long run for the market. I would say we need to broaden the horizon of REITs from real estate to power grids.

You mentioned that you are transferring money to REITs and you have been doing so throughout the last month, but what else have you bought? Have you purchased or added positions to one of your existing positions?
Many corporate transactions have taken place. For example, we chose Forbes when Advent made a deal with Forbes that they will divide society, etc. You follow up with IRB for example if the big investor comes and buys it at Rs 220 and you get a share at Rs 200 or Rs 205. It’s a good idea to come back. An agreement was made with Sterling Wilson which was taken over by Reliance. Considering Reliance’s plan, they’re going to do something dramatic for the business, so you’re going to support them.

There were specific stories that came out of the system at the end of the day. We have invested in the textile sector, maybe in two decades. So we bought the cotton yarn export sector and the textile export sector. So the sporadic stories, the metals and textiles sector are the three things we have subscribed to. We continue to increase the alcoholic beverage industry with every correction because every state is following Delhi policy that it will be forced to follow. This is the brightest future for the two liquor companies than there has ever been in this country. We therefore buy back the alcohol stocks at every opportunity.


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