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Hello and welcome to the CNBC TV18 special from the CNBC TV8 Modi Roseal Studios. As markets continue to remain under pressure, the question most asked nowadays is, are we there yet? Are we at the bottom or close to this sell-off ending? And the sell-off has been quite painful. While the Nifty has lost about 16% in value from all-time highs, the small cap and the midcap indices have lost 25% and 21% respectively.
While the market peaked in late September last year, the real wishes turn in sentiment firmly to the downside is only about 45 to 60 days old. Is it just a plain vanilla correction after a few years of absolutely go- go fantastic markets or is there some deeper underlying malaise at play here? And to help us with answers, we have with us in the studio Ramdev Agraal who will be our guest editor for the hour.
Uh the other area the Trump hint hinting at tariffs on farmer. How is the sector placed? Uh we will be joined by Lupin's Romesh Swami Nathan to discuss all this. Well let's uh get the ball rolling then Ramdu G welcome to the show. Thank you very much. Uh and always good to see you. Reassuring and I think to our viewers as well right who always see you as someone who has seen lots of markets, lots of cycles and I mean they learn from you.
Yeah. Then it is to restart it. It becomes very difficult. So you know every time it is a new new story you know that's the beauty of the market like 9 92 was the first shocker we had first there was a upward move of 7x in 19 months and then collapse vertical collapse from 4200 to 24 2500 and they start market started moving from 700 to 4200 unprecedented in 19 months.
So stories are always uh different. It was not backed up by earnings. It was just some kind of liquidity flow. 2000 white boom. It was sectoral move big time you know. Uh again it crashed uh by 50 60%. 2008 was again GFC uh crisis uh the same 2003 2008 build up and then crash and every time the earnings are broken you know this time the market has moved from 500 rupees EPS to,000 EPS for nifty and market extended from say 8,000 at the bottom to 24 25,000 so it went 3x earnings went double so obviously market got reated big time now uh now we are correcting that uh rating because earnings profile is slowed down but it is not broken.
I mean last year the current year the earnings are going to grow at about 5 6%. And there's obvious reason for credit slowdown, economic slowdown, uh every aspect of tightening by the regulators have happened. And now and there there was the election. So there's a delay in the government expenditure and all.
So all of this have passed. I mean this is a year of actually uh all kinds of uh uh difficulties I would say in economy and despite that we are doing six and a half%. don't forget that you know and now we are exiting probably March quarter with closer to maybe 7 and a half% 8% let's see what comes so I think we have set the mood uh one correction is done the P multiple which was at 23 24 that has come down to less than 20 uh and it is a below 10 years average so nothing stops at the average it overshoots a little bit so that is what is on now if market corrects further from here uh It is overshooting downside.
Okay. So that's what we are in right now. How long it is it see as you said the alltime high was in September. It is not even 6 months that market is correcting. So after four years of relentless rally if we are there for 6 months out here last year we made 50% in the market uh broad market I'm saying and we have lost say 20 25%.
So I think uh it was it is painful I understand it is painful to me also but uh it is very very logical. I mean it's a proper healthy correction you know if indices in small and mid had gone up by say 70 80% it they have fallen by 25 30%. And whose portfolio has done 70 80% they also fallen by 35 40%.
So excesses in the market was very clearly visible and uh regulator worldwide invest everybody was uncomfortable. So this is a very healthy correction and now next year earnings will pick up from,50 to maybe 1150 or 1200 whatever and uh your IPO markets are now shut almost like frozen. Uh so one by one the right things are happening credit flow is improving you know government expenditure is picking up so I think all the things are falling in place and correction has also happened.
So, so just to complete that point, Nifty anything more now is overshooting on the downside. I mean, I'm just looking at the averages. I don't look at the farward nobody knows. We look at the last 10 years last 10 years. Last 10 years average about 20 20 21 2020 half P multiple. Now it is sub 20. So yes, can it go another percent another one?
It can overshooting can happen. Yeah. What about mid and small caps? uh because there Gotham Duger from your team was with us uh I think last the previous Monday and he was telling us midcaps trade at a certain discount to nifty small cap index discount to nifty and I mean there the gaps these are numbers as of last Friday last Monday.
Yes. Yeah. So you know if you see today uh in your money control you can go and see fiveyear uh you know earning uh sorry index performance. So index performance for nifty is about 95 96% up on a fiveyear basis. on same five year basis midcap is up 177 180%. So the gap is too much if it was at about 110 that I understand.
So that excess gain either large cap has to catch up to match midcap or midcap has to keep correcting time wise or actual uh downfall. So I think the divergence between mid and small is too high. Let's see how the market does. Maybe mid will keep correcting and large will make a move or large will make a move but mid will stay there and then it'll catch up.
So market does its own uh stuff. I think most important thing is now don't wait for the because we are closer to the bottom now whether it is thousand points away 500 I have no idea and let me tell you nobody has any idea. Okay I have seen best of the chartist and all telling me they're all eating their own stuff.
So what I'm saying is now this is a time stocks are making bottoms. All the stocks will not make bottoms on the same day. Okay. So if you like certain stock and that stock is arable at your dreamy price and it has gone below that don't hesitate start moving into the market. That would be my suggestion.
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