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our next session is a very interesting one because we're moving away from macros to markets right and we're calling this a jugal Bundy between two Market Masters uh and they are really Market Masters in the true sense of the word because between them they've got some uh I think at least 80 years of market experience they've seen the highs the lows they've seen crisis they've seen booms busts uh really experienced it all I'm talking about ramara and Manish chuki who are our next panelists and this jugal Mandi is between them no pesky anchors in between uh you know Ram G really I mean actually both of them need no uh introduction uh but I'll just say a few words I think uh ramj is someone who is a passionate passionate investor uh he is he's got a childlike enthusiasm for ideas I mean I remember the first time that I met him uh you know I came back with a list and it was not a list which was basically made up of stocks or themes or anything it was a reading list uh so I consider Ram G first and foremost a teacher a mentor uh and his message uh to me and I think others over the years has been read read read read every day and you know you have a hope to succeed uh so uh randu thank you very much for your wisdom all these years I really appreciate it Manish Shani uh needs no introduction either he's one of the most astute uh Market investors that we we have amidst us uh his grasp on Macros and markets and Distilling the macros to the micros uh is I think unparalleled uh he simplifies complex ideas Guided by first principles and I think that is where he really excels uh so without further Ado let me uh request both Ram G and Manish to take the stage and uh dare I say entertain with us with his zugal Bundi over to you guys this is the scariest thing we've done completely unscripted and then Ram went and put his foot in his mouth asking him about economic forecast what if they ask us about Market Focus he only missed by 100 or 150 basis points we get it wrong by 10 percentage points but at least we can say we don't know so we can start off his uh I was at pain to tell Sonia that you're 10 years older than me so you should you should have the first bite of the cherry and you should kick off on maybe as Sharin introduced in the beginning you connect the dots backward so how the last 40 years because you've been there I think since the ' 80s I came only in the '90s so maybe no no I I say it with not not in justest but because he saw saw the the kind of 10x of the index in the first decade and then the Mania of herad MAA and how that played out and we may well be setting up for that so I think we are both in sort of that camp maybe I'll leave it with you so actually uh uh it's a terrific time to remember 1992 uh I mean I have seen firsthand actually 85 was the first boom which was VIP Singh and Rajiv Gandhi combine and uh that was a kind of mini boom just stock market just doubled in one year so that was a small and uh then came the 1990 92 boom I think it he he just said the market doubled in one year just in passing but just listen to the second one when the index went 6X from 700 to 4200 SX in 19 months flat that gave buz to RAM and miti and into M so uh I started with zero money I zero literally zero negative rather and we made 30 crores in 19 months and that became the seat capital for m h so yeah then came the next Bull Run was the Y2K bull run then came the GFC the commodity Bull Run rise of China it was actually rise of China Commodities and everything and then we had little L and then preo so uh I my sense is what I've seen in 1992 this is 10x of 1992 we are into seriously very large bull run the issue is this time there is a SE there is an there is an RBI with a complete digital system they actually can see what badmashi we are doing so uh with the poce the crowd will be a little limited uh little disciplined so my sense is eventually we'll run much more but it'll be little prolonged so my sense is that this is a I mean I think this is a retirement time for us if this bull for I'm 10 10 years younger yeah so you'll see another bull so as prashan said I'll I'll just supplement as he said it's useful sometimes to give context in which this is happening uh and uh Ki will know this well also that when we broke the bretonwood standard and the US started basically printing money and we all pck to the dollar every decade we had a minia in some Market or the other so in the ' 70s you had the nifty50 in the US with the disne and the kodc and all uh sorry that was 60s ' 7s then it goes to Commodities which is gold and silver and all of that uh and the famous Hunt Brothers 80s it went back into Commodities and emerging market so that was the rise of Japan and Taiwan and all these Manas go up 10 to 15 times in one decade then we kind of got the tail end of that uh of the 80s end which really was Japan Taiwan and AR mea I think decided he wants India to participate in that and the '90s of course went back to Tech and us and the NASDAQ and then the 2000 to 2010 period came back to Commodities and emerging markets in which India China all benefited and that was the rise of our great bull run as well of the 2000s the last decade again we saw 2010 to 2020 going back to financials technology the Fang Mania and that's why the supposition for most investors in the world is again this decade comes back to Commodities and India and to saman's point about how do we play this game this time and fortunately RBI keeps coming and you know keeping the market cool from the dead side and SE is doing a great job getting the fro down because what you don't want is all the returns to be front-ended don't have parabolic Market yeah and then you have 20 years of a bare Market which follows so if we go is going to happen if we go 10 to 15x in this decade that would resemble what happened to Japan in the 8S and what happened to China no even India 92 '92 to 2002 right so that was a very bad period yeah so so that that's a good cue for you to now talk about the retail investor and the rise of retail in IND so why I'm saying this is that uh rise of retail investor and the the force of it people have still not I mean now people are getting sense of it but they still not understood till 2020 we getting about 300 to 400,000 customers per day per month the industry as a whole come covid uh digital onboarding starts no physical checkup for onboarding in five 5 minutes you start your trading and all and we start getting 4 to 5 million customers per month 4 to 5 million customers per month from 40 million dmate accounts now we have clogged 150 million and I think in this is threee story and when you imagine 5 million customers a month and these customers are cumulative in character they're not flow they are cumulative in character and we are headed for maybe 300 million straight in 3 to 4 years and maybe I don't know what is the end game maybe 10 years of 500 million so this is a uh amazing uh stock market boom uh stock market liquidity inflow into the market now what it does is of course it lifts the all the stock prices midcap small cap large that anything goes and last year I think 20 23 24 the return for across the portfolio at least in uh my AMC and what I invest in generally uh is about 50% across the portfolio I'm saying is not I'm not about one scheme or one stock I'm talking about the entire portfol extremely Diversified literally I bought the market so that is 50% so you imagine the kind of Bull Run which is lying underlying despite all the restrictions by CB regulators and everything so and we have still done 150 million now you imagine people when it was 50 million the 50 million satisfied customers were there and they were saying Brothers come and enjoy the uh the bull run now there are 150 million customers saying boss this is fun lot of fun please come so you are getting not a smaller number of demate accounts you are getting larger number of demad accounts I have never seen in my uh office somebody coming and saying sir I have 500 CR fixed deposit what do I do or 1,000 CR fixed deposit what do I do so this is the kind of shift which is going to happen from fixed deposit to the mutual funds or whatever stock market the investment cycle is back it's not happening on the ground it's happening in the stock what going to happen is my sense is once is that stock prices are up then what happens is the the the supply response comes in there's a demand response now there is Supply response so all the uh IPOs you're seeing 50 times 60 times then qips but put together they're just about a lakh CR a lakh 25,000 30,000 or something the actual flow is almost 5 to 6 lak CR and growing so there is still this year is second third year this is still excess excess demand then Supply so I don't know how how fast I would I would expect government to uh at least divest a lakh or 2 lakh CR of stuff immediately after the election obviously don't expect before election and so after election and the larger corporates like goo and all those big ones which are waiting in Q 50,000 1 lakh CR kind of IPOs let that come I think we are going to see all of them coming in uh so I think the supply response should come and that will broaden the market in a very healthy way and so the fund will become even bigger I hope that is what happens but uh anybody's call No it's it's again consistent with the phases of Market which we see where the profit cycle starts in one sector then it spreads to another sector then the P multiples expand and then we start creating new stories and paradigms like 15 years ago it was bricks will be the new engine of the world we are setting ourselves up to say India is the only large economy in the world of this size which has growth ahead of it not the re what the investment theme I mean you are very good at uh so so there are four or five things which see we are just copying what's happened in other countries it's nothing unique we've all Trot the before and if you look around the world typically as again samiran was pointing out when you get richer you don't buy fmcg Goods you buy consumer discretionary so you spend more money on improving your house you'll spend a lot more on property you'll spend on travel you'll buy a better car uh you'll do all your home improvement stuff you'll go out to eat so consumer discretionary is one very very big play housing of course you start with that but do you do you think it will never trickle down no it will obviously because each time when you build a home there are you know five people who are supplying and 10 people who are servicing you and India has this unique pyramid of that 2% Australians 18% Filipinos uh and then maybe a billion people living in Africa and it will trickle down uh and if I then see the math for example 20 years ago we were selling 1 million cars same as China we are barely crossed 4 million today China is at 26 million cars we sell some something like 12 or 13 million air conditioners China is at 220 that's the scale of change which lies ahead of us in the next 10 years so that's of course one uh second is as the government privatizes effectively to the private sectors so you've seen uh effectively Reliance and BH have run the Telecom infrastructure of India and we couldn't have run the country in covid if this wasn't there or adani now runs the ports and the airports of India uh IND pretty much Indigo and Tata will run the airlines of India so all of these privatization beneficiaries will become very very large The Profit size is very very large over here so that's item two you and I may not participate because these are not traditionally High return businesses but you're getting the likes of Blackstone and others to come in they're taking over even the commercial properties and building reach so that's kind of item two item three I know we all enjoy doing the zamato and all of the world with the internet enabled businesses uh can become very very very large in the country and like like you said in your own field the rise of zeroa or even Angel and even yourselves with what happens with the rise of internet and making life so easy for people it just explodes the business uh and I think we've been beneficiaries of that in our life as well that clearly is number three but the biggest Mega theme and I'm sure Ki and weya will talk about it is financialization we are $4 trillion economy we save 25% there's a trillion of saving every year of that today only half comes to financial assets half is still going to physically buying real estate or gold so first of all that has to get financialized within that the share of the banking system has to become much much larger and I'm I'm not going to do this because I'm sure we and K banking system will be larger significantly larger I give you okay let me give you one good stat uh and although I know you know you have a AMC and we both love the mutual fund business but just for context uh HDFC uh bank today would be what a $60 billion uh net worth for a bank which is 20% of India's banking system uh and let's say it'll be a 600 billion OD balance sheet size if you are saying this country gets to 5 and 10 trillion and let's say we only want 15% compounding which is four times so HDFC Bank needs to get to $240 billion market cap at a $240 billion market cap uh $240 billion net worth it will be a two2 and A5 trillion do balance sheet which is still very very tiny for a country of this size in the context of A10 trillion uh you know economy but do you think yes size will increase but do you think the economics will it be in their favor because they it will be because like I said a you're taking share away from Real Estate and gold then you'll take a share from public sector Banks what about uh uh actually Bank deposits going to the stock markets so I'm I'm glad you are so let's again take the same math the biggest mutual fund today and I'm just rounding off I don't know my friend in SBI to be unhappy but let's say HDFC mutual fund is a$1 billion market cap and let's say you want to compound at 25% so you get to A1 billion market cap at a100 billion market cap at some point he will sell at 4% of AUM more or less which is what the world average is today it's priced for Perfection to get to 100 billion now you multiply that by 25x so he needs to be $2 and5 trillion AUM impossible whatever you do it's not going to happen so mathematically you'll make a better return in the bank than in the mutual fund while the business will do better in the mutual fund it will compound faster but you won't make a stock return in it as an example and I wish nav well I don't want him to come and beat me up but both are friends and I own both businesses today but uh like I told you when I last Diwali interaction that you will be 10x in 10 years but what what we have seen in the amounts are minuscule and you know viya will I mean viya is what he's 30,000 Crow Network today and he's he's guided so I can share it publicly he's saying I'll grow 25% for 5 years so he'll be 3x in 5 years at that point also he's uh 90,000 Crow network no I'm not I'm not doting your F it's a drop in the ocean what I'm saying is a shift the pace at which people are shifting their Bank deposits to stock market side if it is glad n just walked in he missed all the mutual fund numbers so what I'm saying is if by chance there is a 17 18 lakh CR accretion on the bank deposit side it's too tiny that's what I'm saying listen to me and just about 5 six lakh on the mutual fund side or entire stock market side if that goes to next year 10 lakhs to mutual fund or Capital markets and deposit accuration only is 189 lakh then what happens to the cost of deposit you see it can be a circular argument we can argue it won't happen and therefore the cost will go up I'm I'm just giving you the aggregate numbers that Banks Banks may be 80% mutual funds may be 20 over time the mix will change but the country is still compounding at a certain rate and you're still taking away share from Real Estate and gold so it's not one is winning at the expense of the other and I'm seeing mutual funds will compound 25% Banks need to only do 15 the endpoint trajectory still you cannot imagine a HDFC mutual fund at 2 and a half trillion at that point but you you can imagine it for the bank it's it's it's a done deal
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