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What has happened is that typically in wealth creation top 10 companies they contribute almost 50 to 60% of the wealth credit because they are large base like Reliance and TCS and those guys but this time unfortunately top four companies like a starting with Reliance HDFC Bank, Infosys, TCS all four have not made it to the list.
Because the large caps are not grown at the pace at which the mid caps are grown. So, now the tide will turn to large caps and mid caps, mid caps will underperform large caps. So, ah, is there any particular stock that you think could do well next year or coming year? Like? Like that you can't say but now Indigo which is kind of a flag carrier of aviation here.
Is in trouble because of whatever this flight messed up and all. So that could throw an opportunity. Could throw at opportunity, right. It's down to 1000 bugs. So, there will be, there should be a very good real estate boom. Which is already on. But you will get momentum as you go forward. So now the next era is going to be automotive boom.
Today we are joined by market veteran Raamdev Agarwal. Whose insights have shaped an entire generation of Indian investors. Motilal Oswal recently released their wealth creation study that captures on how wealthy Indians and India will get in the coming years. He believes that India is a gold miner of opportunities.
So let's dive into what he thinks about where India is headed and what are the opportunities that lie ahead. So before we get into the big questions, uh, what's on your Raider lately? Like, are there any big factors to watch out for for investors? What Should One Keep an Eye On? I mean, for an investor I am saying.
Yeah. There is a different speculator and investor. For investors, it is earnings earning earnings. Hmm. What is happening to the company you are investing in and for the overall market, and what is the broad Nifty earnings heading towards? So if the earnings are picking up, markets will follow. We g = r if there is earnings growth there is a return if there is no earnings growth all kind of stagnation will happen ah considering the debate on whether valuations are expensive ah do you think we are quietly entering a phase where ah probably you know ah the narrative of India reaching at a certain level is a kind of becoming we are kind of entering into a zone which is ahead of fundamentals.
Like is India getting into a phase where you know the narrative is a head of numbers not really see the rhythm of the market and rhythm of the value creation will be different ok so sometimes the market is ahead sometimes value is ahead you know so initially what happened when the post covid the earnings started ah growing at 25% ₹500 EPS in and nifie went a 1000 in 3 years flat and the market just went rocketing thinking that now 1000 1000 is going to go to 2000.
So the market went ahead a little bit then the earnings stopped you know earnings growth stopped and slowed down now the earnings engine is again picking up now market then the supply started coming so there is a supply shock right now so now the market is gapping with the supply and slowing down in the earnings.
Now ah so both are slowing down in the earnings requires that variation should be a little more moderate. The supply will make sure that all the stocks are corrected to the right level and then hopefully the earnings will again pick up by 2 to 12-15% whatever in the years to come. The sectors could be different.
So what will happen is the sectors which did well in the last five years may have a very different set of sectors in the next five years. So the entire thing has to churn again. People are ah mutual funds are sitting with one stock but actually the earnings are coming in the same stock. So they will sell one and buy yet another.
So those kinds of things are that's a market move. Hmmm, a lot of churn basically. Lots of Churn Will Happen, or. Hmm. So, in your a wealth creation study that you launched. You've been told that large caps are supposed to be kind of do-well-looking ahead. So, could you absorve a little on that as compared to mid and small caps.
So it's just a thought project looking at the dater. I have shown you that the header. You know, sir, what has happened is that typically in wealth creation, top 10 companies, they contribute almost 50 to 60% of the wealth credit. Because they are large base like Reliance and TCS and those guys but this time unfortunately top four companies like ah starting with Reliance HDFC Bank, Infosys, TCS all four have not made it to the list.
Because the large caps are not grown at the pace at which the mid caps have grown. So out of 100 wealth creators 70 are ah mid caps only 30 are large caps. Typically it used to be from 50 55 5% 60% used to be the large cap. So my sense is the market has overdone on the mid cap side and underdone on the large cap side.
So now the tide will turn to large caps and mid caps, mid caps will underperform large caps. That's my sense. Hmm. So, last year we saw Asian Paints being one of the broken bluetips. So, ah is there any particular stock that you think could do well next year or coming year? Like? Like that you can't say but now indigo which is the kind of a flag carrier of action here.
Is in trouble because of whatever this flight messed up and all. So, that could throw an opportunity. Could throw it at opportunity, right? It's down to 1000 bugs. Or. Ah so, let's see what happens. So, that's a good opportunity for you know. It may throw a good opportunity to invest at some point of time.
And so also there is a small caps have like investors have been shying away from investing in small caps right now. Ah so I mean what would you suggest to investors about investing in small caps because it is a very risky area considering the flow ah a free float is quite small. So what are the recommendations and suggestions that you would kind of I don't have see every stock but one should not bore too much about the small cap large cap mid cap the whole thing is whether ah a company a say if you want to buy automotive company there is no automotive company which is in small cap hmm you know I mean most of the companies are more than a lakh crore so if you think there is an auto boom ahead then you have to buy a large cap and in that say there are at least 10 companies out that you like say Maruti and Mahindra and Hero and whatever you like.
So any company you like then you see whether that company is properly valued or not it is a large cap then there must be some auto company auto auto component company which might be from 8 10 crore and 5000 crore that will be in the small cap now because auto is doing very well. The auto comp will also be very good.
So one you can buy very large cap automotive company and nothing on this chariot can stop this auto component company from doing well when the boom happens in the large cap. So I don't think it is to do with the segment but it is to do with the overvaluation of the company itself if I can get a company which is 25% ROE 25% growth and 157 PE you know in a small cap I am perfectly all right to buy.
So from what we were chatting earlier you believe that India is a gold mine of opportunity yes. Ah so ah from like looking at that perspective which are the sectors that you know that an investor could capture on because you said that roti kapda is already kind of getter to. So there are other things like ah beat housing and travel.
So, like that, do you, can you elaborate on that as well. Yeah. So, what is happening is now we have charged $2.5 thousand per capita. So basics are taken care of. So, bread and clothes are taken care of. The next is the house. We have lots of supplies available. So you have to figure out who can survive the supply boom and still make money.
You know those who are brand those who organised well. Their exhibition is good, their brand equity is good. So those guys will do very well. There won't be any depth of demand per se in the housing side. Then the car. You know the transport personal transport. So ah India is still in the age of motorcycles.
We produce 20-25 million motorcycles but we produce only 3-4 million cars. China 15 20 years back they used to produce 4 million cars. Today they are producing 25 million cars. So now the next era is going to be automotive boom. Now Which Car Company Will Do and Weather It Will Be EV, Weather It Will Be IC.
So all those things you have to figure out but I think the car boom is a round the corner. May be this year itself and may be after two three four years. Because we are still at 2 and a half thousand. So I think for a serious car boom to happen. You need to have $4000 per capital that's a global experience.
So weather India does it at 3000 I don't know. So a but then it is going to happen. We’re not going to We’re not going to go to $0000 til we do the carb. So some of these things are there. So the tipping point for lots of businesses will keep happening one by one. So I just gave an example of this. The biggest of the biggest is going to the capital market.
We're where ah household savings of almost earlier it is to be half% of household savings used to come to the market. Now we are getting 2% of household savings every year. And the good thing is it is not a flow. It's an accumulation. So everything which comes in here they stay in the AMC and wealth.
So they are able to make money out of the AUM as well as a flow. So that game is becoming bigger by bigger and bigger and that's why in the US and other parts of the world. The biggest businesses ah are ah asset management. So like in the US, BlackRock and all they manage is 10 to 15 trillion dollars.
The largest asset management company and they are still growing at 15-20%. So you know they are much larger than the ah like it's almost like 50% of US GDP single company. So that is a potential. That is what is going to happen here also. So the entire capital market edifice is going to be massive. And it is extremely well regulated in India and there is lot of discipline free entry.
So you have to perform also. So I think that is going to be very exciting. So like that you have to keep thinking right now we're writing the report. So we know about we can do only about a few things but it tells you how to think about it. You Know It Has More to Do with the Thinking Rather Than Giving What?
Why are you thinking? Or how to look at things rather than which one to look at? Hmm. So, I also give you one very useful advice. When we were talking, I spoke about how to select companies and how to select companies that could survive set tax. Yes. So, I mean if you could kind of you know tell that yah.
So, you know this journey of four to eight to 16 trillion, is also filled with potholes. And Indian pot holes are pretty you know in Mumbai you are there all the roads are with the pot holes. So, this journey is also with massive pot holes. So your vehicle must survive those pot holes. That is the first important thing.
So everybody goes for the speed but the thing which is speeding well may not be strong enough. So you need reasonable speed but you also need strength of the car which can actually stand the potholes and move on after that also. Because after the pothole when which it breaks say like indigo is right now kind of a hit up pothole.
It should have that capability to make a comeback. Hmm. You Know. So that is very ah that is very important. So you buy every company which is looking brilliant today. We Will See Some Kind of Pot Holes. Hmm from where it will come. God Only Knows But It Will Come. Hmm so it should be able to weather that pot house.
So what is important to is to finish first you have to finish. Yeah. In47 100 At the age of 100 India will be really a bird of gold. But at that point you should be there sitting on the dais rather than I just scrap. Expected to. Mr. Agarwal, thank you for your time and wisdom. It's always a pleasure learning from you.
And to everyone who is watching this video. I hope you found this video as insightful as I did. Thank you for watching. Stay tuned.
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