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Well, thanks for tuning into this broadcast. It's a special day. It's a special uh time of the year as well. I always say that some somehow some magic happens when Lord Gpati arrives into the country. I don't know if this is the ushering in of potentially some good times because right now and that's why the best person to talk to for trying to understand the mix of macro and micro and therefore what happens to the world markets and India is Mr.
Ramdeal and I I'm so lucky that I've caught him just before he embarks on on a long holiday. Mr. Garal, thank you so much for taking the time and speaking to us today. Yes, welcome. There are so many things to talk to you about and I want to talk to you about AI. I want to talk about everything else but I can't help but starting off sir without uh starting off with the bond yields
globally the inflation fears what the bond markets are indicating and what's the repercussion of something like this on risk assets and actions by all all parties involved I mean bond is not my specialty but uh the pace at which the bond yield is rising in US is definitely sign of some trouble what it will ask for to get quenched.
I mean whether Iran gets settled whether uh something has to happen in the sense that uh either some austerity measure comes from US that they'll cut their fiscal deficit or something like that but it is not only that I mean the bond yields long long tenor mid 10 year 30ear uh they go up it's a much deeper thing so there is something in the whole system like uh apart from uh deficits of the world uh I think the capex boom I mean the synchronized capex boom all over the world where even the the guys who are the most profitable highest cash flow machine all the hyperscalers they are the biggest borrowers in fact they become net cash flow negative so I think this is unprecedented time in terms of capex boom on the corporate side and uh uh deficit boom on the government side both coming together and putting pressure on the what do you call bonds so I don't know what will happen but this pace of rise is not in
right So typically sir I again we may not know the catalyst which may lead to a change right per say it's difficult to pinpoint it but you reckon because this is unsustainable something has to give something has I mean it you cannot keep raising every month by 25 basis point these are things which move by a point or two uh it's very stable kind of scene it moves in band but uh it's breaking the levels every day so I mean now you you are level where I think it was in 2007 just before the crash 2007 7 8 this was a level five quarter five this thing and you are reaching there uh and even 2000 was about six quarter or something like that so I think you have to just read in global press uh the times are different uh global economy has expanded a lot more it can probably absorb more deficits and things like that but uh but it's not giving easy feeling and it's definitely not good for equity markets uh and equity markets are particularly US is all-time high valuation two two and a half times uh corporate profit to GDP.
So a market cap to GDP. So even that is not if you are at a level of one time or something like that then the impact would be a little uh slower. But if you hit on uh this uh leverage government leverage corporate uh leverage valuation I mean very high valuation. So and how much is the leverage in the valuation itself?
Who knows? So I think uh this makes me uncomfortable. Let's watch how things pan out. Got it. Could the I'm just trying to understand uh is right now this morning for example in India we are seeing uh it doing well AI after what anthropic has said etc may have cooled off a little bit etc. But uh I remember the last few conversations that we have had Mr.
Araval and uh you are not only using their AI tools very well I would suspect but also fairly constructive on this whole AI conversation that is happening and if indeed the business model is also lucrative enough can it drive the flow of capital to the countries which are at the forefront of AI and therefore much like US valuations being higher can capital still keep on flowing there for the next two Yes, that's what has been happening.
Uh uh but uh see in AI we have to understand two things. One is the physics and innovation part of it and second is the underlying business model how how it will become. So we have to be a lot more in a stock market we have to be a lot more concerned about the business model part of it rather than innovation part of it
like uh if I mean uh say the internet I mean in '90s internet came but internet person didn't have any business model it was just a infrastructure I mean the world without internet and world with internet these are two different worlds so uh it's almost at that level on internet now the biggest innovation is AI
so I don't have any doubts that uh it's a it's a dramatic uh innovation it is going to stay and investments will happen over a period of time but on internet when it came then e-commerce came in all forms of e-commerce quick commerce uh Amazon came in and you know so uh those pro so you'll see the business models emerging as we go forward adoption diffusion of the technology and business models that so the new business models that will be very valuable but which are they and uh so my sense is markets are running ahead in terms of what is the physics and uh innovation part of it the that the physics are the magical part of uh AI which is of less concerning to the stock market finally because stock market is about the earnings and earnings are going to come from the business model
got it okay so I with my limited understanding I still I'm not able to visualize where exactly 1 trillion2 trillion trillion dollar revenue is not small even today of course Nvidia is also not trillion dollar despite most successful AI chip company. So let's see I mean from where it comes okay so maybe difficult to predict that we'll wait and watch.
What might be easier to predict is that if oil prices are at the levels which they are it hurts economies by and large including India. Uh this morning we were talking to people who were saying looking at the inventories etc and stuff like that they won't be surprised. These are oil experts who said that somebody from Dubai etc joined.
Now again who knows but if oil at 110 115 120 how bad is it for Indian equity markets Mr. at all. It is definitely not good in the sense that we have now created a buffer by doing this FCNRB of 140 $150 billion. We definitely have we are in much more sounder footing as an economy to pass through this crisis but the crisis is on the table.
So till the crisis uh passes through uh economy is doing well on the other hand. So uh so I think markets will remain very you know kind of a shaky. I don't think market will make a big move. Okay. Okay, despite the fact that earnings are growing, economy is doing well, on the whole things are okay, monsoon is also passing through almost uh 5 7% 10% whatever is the deficit but we are done Mumbai tanks are full.
So I I would say that uh there is not much concern about the domestic economy but the geopolitics, the Iran, the oil price, bond yield now this is another headache which is uh shaping up. I mean if the global bond uh sells off I don't think we can stay here and our yields will also spike right that's right
and that will have its own repercussion so let's say I mean the second half equity markets do have a worry on the global front because of the bond deals uh oil prices have an impact on Indian markets for sure sentiment and otherwise the macro is it prudent to be cautious on markets right now of course you have to be very cautious and you you should not be speculative See uncertainty at times gives you very good values also.
So this could be opportunity also for to pick stocks if the market's correct or stock corrects you know so uh you have to be look out but broadly I mean there are whole lot of guys who are speculating so in speculation you have to be very very careful uh that you are not overly leveraged because the best way to cut your risk in the market is to be unl The best is only word and even further cautious is that go 10% 20% 30% in cash
then nobody can touch you let the whole world burn and you'll be fine. Are you on 20% cash right now? No I I never had you never have cash. I never had. Agree. Agree. But if you had the option or if you had that philosophy that you can sit on cash you would be happy to take 15 20%. I would say be cautious but you it is your measure.
How do you want to be cautious? Agreed. You know if I'm 100 I'm I'm unle guy I'll never so maybe I should have at least few% cash that will that will make it cautious but the guys who are leveraged they should cut the leverage I hear you sir between the last time that crude was at 110 115 and right now the difference is that we have put behind us a strong quarter one
with commentary from companies not sounding skittish thus far at least People are not sounding any alarm bells and there is proof of the pudding. Is that an antidote for Indian markets? Crude uncertainty. Corporate India is doing well. Yeah. So that is a good part of it. my uh corporate earnings are shaping up well uh at 15% plus kind of a expected growth and even now at $1057 I don't think it is disturbed because for me direct impact on the economy is passing through uh weaker sorry stronger oil price and weaker currency
right I mean and both are interconnected because I have enough reserve and yet the lower oil prices they they take a toll on my currency are the saying. So, so this is this is what is uh the thing. So, uh in this situation, I I would say that uh uh unless you have a lot of conviction on what you're doing, uh I think be cautious.
Okay. Look at the this bond move that rattles me. Wow. There's three times in the last 10 minutes, sir, that you've spoken about the bond markets. Clearly, they are worrying you. Yeah. Got it. What if indeed the Fed which is going to meet does hike rates a little bit difficult? Yeah. So maybe it is building that only you know uh anticipation the yield is going but you know yield is stabilizing at higher levels 5 5% 510 520 that is so a lot of equations go hire got it.
So, so if the US markets see some in the armor because of higher yields etc right or if the AI trade were to reverse a little bit here and there etc. Will it take down all boats? Therefore, the Indian equity markets aside of oil have another reason to worry about as well. You think sorry and so be cautious.
I mean economist econom is doing well will come out very fine. Got it. I'm sure we have all the muscles to pass through right now. the forex which was only weaker now we are we are stocked for this season it looks like okay got it sir a lot of people and you've probably [clears throat] espoused this as well that maybe don't look at the nifty50 because yeah headline index but don't look at an index because bottom up sector specific right manufacturing renaissance this that etc what has impressed you the most in the last 3 to 6 months as you would have gone through the country, private markets, public markets.
What has impressed you the most? What has stood out for you? No, the see the combined effect of uh uh the cut in GST and uh and uh credit uh availability, liquidity available in the system. I'm seeing huge upsurge of uh I mean Indian businesses, consumer companies, they're doing very well. They never had it so good.
Okay. Yeah. They never had it so good. So uh I was in Hyderabad uh just uh the weekend and uh the companies I met 8 10 of them they're all saying sir we are surging so 30% I mean these are midsize companies but uh they they they are very confident got it sir and and this you are sensing in a particular ecosystem like consumption or is it across the board
consumption capital goods high quality capital goods global capital goods There is a capital goods boom, capital boom, capital spending boom. Not only because of AI is a completely brand new, then you have the defense, then you have energy transition, all of and they're all very capital intensive. They're all coming together.
So, uh in India we have the GCC boom. So, all kinds of construction is on. So, we have a very good uh the things. to the guys who are supplying Kepler goods uh and with rupe 95 I think Indian manufacturers are really in demand I mean for the global exports of a lot of things so I'm meeting companies they're saying they're 70% outside and they're flooded with hers and things like that
wow so uh I mean maybe we meet the guys who are doing well that is also there for sure we don't meet the guys who are struggling but uh generally the uh uh the the business confidence looks very high. Okay. multiple. You reckon that is the area that investors could focus on as well because how uh barrier and benefits you know I mean uh how beneficial it looks to be right now but what are the barrier that benefits continue
so that is very important that uh you focus on today's uh optimism is one thing but how long the optimism can continue the barriers of entry into his business whether it is a scale whether it is brand whether it's some unique technology or unique location resources whatever so those barriers that decides the value of the company not the just the current earnings.
Okay. Okay. Sir AJ since we are talking Tuesday uh two or three big things have happened right and and this year seems to be that meta of large companies listing right nse coming up soon at some point of time Tatasan's possible listing as well. Yeah. So it's like behemoths coming to the markets right.
Can we talk about what that is doing? Because view private primary markets are sucking capital from the equity markets. The other view is 32,000 crores of monthly SIP money coming in. It is good that there is primary markets, secondary markets or inflate. How do you think about this sir? Yeah. So it is it is a basic function of the market to provide capital to the real industries.
Right. Okay. uh and also provide liquidity to the guys who are invested in right so uh now since uh influ I I keep saying that from 2020 this is a different country altogether so when the retail influx is happening and more so what happens is this money is going into I mean of course large companies but even the smaller companies real thing real and uh because the demand is good the market in secondary market is very vibrant secondary market is vibrant primary market is vibrant primary market is vibrant Even the seed level is also vibrant and you are putting more saplings more seeds on the ground they will all this mortality rate at this earlier will be very high but finally one out of 10 one out of 50 they will come out so if you if you're sewing instead of 10,000 seeds you are sewing a million seeds you'll see as many corporations coming on one lens card one nse one uh something one grow or in various fields you'll see uh companies coming out with a gap of 7 8 years because it takes about 8 to 10 years for any successful enterprise to be capable of visible uh in the people uh to to the market at all.
So the companies which are coming in now they're 8 10 years old companies if at all the new youngest ones I'm saying 8 10 12 years back. So now you'll see many more I cannot imagine what will happen in 20 say this is 25 in 35 36 I think you not know how the markets look because there will be so many new names.
Okay sir. So in in your mind one shouldn't worry too much about the facts primary raise is that a worry or is this the nature of the market this is nature of the market see India is structurally has 50% promoters holding so when the demand is coming valuation levels are so good the promoters are finding easy to sell their blocks also at times for uh for seeding some new business if it is not related If for related also you can do primary and uh to meet your personal needs and some other promotional needs you can always do go for uh secondary sales.
So that will keep reducing the promoter holding by a percentage of two or three and that becomes the largest opportunity I mean I would say largest hap uh structural change which will happen in next 10 15 years as the market as the retail builds up happens. I mean we are at about 335 million demand accounts.
my senses will be like like half a billion in next six seven years. Wow. So and then existing ones will also put so I think this SIP which is 32 33 should touch 60 70,000 uh and that that will require even more paper. So it's a broadening of the capital market. It's a celebration. N couldn't have chosen a better time to list.
Yeah. I mean it should have happened earlier but fine. Yeah. I'm just saying but that's the true advent right now because the capital market sector right that is now a sector to reckon with right India is see now there are five six companies more than lakh cr market cap how many industries are there like that except for banking I don't think of many say you have nse you have BC you have HDFC mutual fund SBI grow
right so five I could count you know so there are five six more than a lakh CR and growing at 20 25%. I think it's a it's an industry in itself. In a few years, Motil just kidding. But on a on a very serious note, sir, I mean the the time is ripe for NSE to come in, right? Because it's the mammoth IP.
Everybody's spoken about it. NS is there. It is there in all the portfolios privately. Now mutual funds will will take it up. I mean it will the holding will get finally institutionalized. I mean all over a period of time you'll see every single shell is sucked by domestic and uh and global institutions one by one
right and and s just by what you said it seems like the sector I'm not asking you to comment on specific nse but it seems like good players in the capital market sector are a great 10ear story presumably if indeed all of the what you said even then capital market place industry I mean it's a 5y old industry
so people they just walked into the party parties yet to happen. So uh whenever things become a little more sunny in in terms of uh whether it is bond yield whether it is uh Iran or whatever I think we'll see better days I mean we had great time between 21 and 24 and then 24 to 26 is a kind of a rest
maybe 27 till 32 or whatever there could be some good period peaceful period amazing the other big news maker and I'm not asking again never am I asking you to comment on specific stock sir but the other big newsmaker today is of course HDFC Bank but the reason I bring that up right now is because the whole expectation was that credit growth will pick up in the second half and therefore banks will do well.
We already have a very different SBI and a different ICA bank relative to the past decade out there in the frey as the leaders in the private and the public sector. Now HDFC Bank might have a new CEO as well or will have a new CE in the next 7 10 days. What do you think of banking sir? It's a terrific franchise you know I mean the the entire bank uh private banking franchise got hurt because of this leadership transition and now even if that is completed and market is optimistic for whatever names they are hearing so market is very optimistic so let's say I mean buy on rumors sell on news you know so I think see it's the the stock has been hammered out of shape and the franchise is so intact and pristine so I would think that uh I mean it will not So it will not only correct its own price but it will lift the entire sector.
Got it. Yeah. Got it. And you believe banks per se in the next 6 to 12 months could do well because it's a sector that has won no most pristine in 45 I have not seen a bank balance sheet like this and growth like this of 70 80% of this base. Why aren't they moving then sir? Because of this uh thing there was so much of selling by FIS they went down from 52 53% to I I heard about 38 39%.
I mean 14% in one one year. So that kind of flow that kept the price low. But you think it'll reverse at some point of time. Okay. Okay. So the other thing is do you reckon that an anti- AAI trade so much spoken about for the last 12 months? I mean today it is up four 5%. Maybe no apparent reason maybe comments by anthropic maybe something else.
What's your view that it's a sector that has confused everybody? I am not a great guy to know about it but better than you. No, no, no. In the sense that see everything is overdone that accenture accenture accenture price is actually driving it in US accenture went down from 400 to almost 118 and from 118 now it is 195 I think yesterday it shot up by 3 4% and that's what is the uh this thing collateral here so clearly world is recalibrating the impact on the services industry and uh hence they're saying they're not finally they going to die they're they have a life even in under AI for AI implementation who is going to implement AI in the enterprises they are the guys who are going to interpret uh implement so I think uh finally let's see maybe Accenture and all will show the new business model uh in the days to come
amazing and and and s one of the largest groups also might finally see a resolution to uh maybe not as much of a listed markets impact story but just that resolution the Tata Sunense uh because of the RBI's directive etc any thoughts there more the marrier for us if there more companies listed here you bring Microsoft here Nvidia here we'll be happier so our own data sense gets listed finally so it'll be lot a lot of business for us lot of interest more for research uh more value creation for all the Tata group companies who own them and hence uh the lot of more wealth creation uh for the shareholders so which is a good thing
got it sir sir if if Ramdea were to construct or think of what does he like most in India right now and if I had to give you only two buckets which is either manufacturing or consumption right I know that in the past when we used to speak you used to talk very favorably about the consumption story of India in the last 15 20 minutes that you've spoken you've spoken about manufacturing and the renaissance and the export opportunity there if I were to give you only two buckets right how would you split 100 rupees between the I no I I will go by the opportunities you know I don't have that unlimited money like markets
so I'll go by what opportunities come and where my anal analytical mind goes but niche manufacturing and with a global outlook they seem to be kind of uh uh coming out with yet another that that looks to be uh one of the very larger opportunities uh coming up uh because lot of global clients they definitely don't want uh Chinese and they want Indian uh guys to do it and the guys who have done it they are getting orders left right and center so even in AI related stuff because it goes right in the data center and many uh they're saying so uh I am seeing specialized cable guys and all saying sir we cannot handle the orders
so you know and they're very global and very pricey so what I'm saying is I think those are niches where still we might be able to find uh some companies which are not fully explored period. My my final question sir and which is that uh in in a lot of these cases because the market is starved of great compounding ideas if you will even though there are plenty of them out there some of the valuation multiples that some of the precision manufacturing companies aerospace catering companies etc have all gone through the roof right some companies are pricing in multiples FI30 FI31 is this a is mania or
whatever it is if it is too popular you're not likely to make uh reasonable amount of money also. Don't don't count a sector nothing any company if you price it you price it uh like uh 80 90 100 all the best to you god only can help you okay sneak peek sorry I I'll extend my one last question to this because I got a gem around in investing right wealth creation study but okay in in in in about a month's time or thereabouts right uh what is that investing nugget which is the discovery of 2026 for Ramdeval you In the past, you've given me the power of compounding, the power of uh you know valuation, multiple other things.
We did a fabulous series out there, right? What is it that you think is a new discovery that you made in 2026? Not new discovery. The top of the mind is that uh that Phil has thought that uh uh you know uh you know for sure what is going to happen but you don't know when it is going to happen and that's where the role of patience comes in.
You know for sure markets are getting say like stocks are getting underpriced they will come back but the moment you think that it is going to come back uh actually it goes down further. So then bringing conviction and patience if you have it then patience and if you don't have then conviction and go and buy it because you would like to have your conviction and the direction of the market in the same side.
True. which uh which is not the right kind of a uh investing. So you know what is going to happen but you don't know when it is going to happen and and hence there's no uh there's no certainty. Uh so you have to win the game unconventionally. You have to bring uh patience and actually you buy you're convinced you buy.
In fact if the market doesn't like it the best. Okay. Yeah. Okay. Well, and unpopular themes with conviction, large quantities, uh maybe you make money that way. Mr. Garval, thank you so much for taking the time out and speaking to us. I really appreciate your time. Thank you. And viewers, thanks for tuning in to this very special conversation and a timely one at that.
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