Investment Faqs with Parimal Ade (Investment Satsang- 23)

5 min read
Here are some questions asked by the viewers in the Investment Satsang dated 1st October 2021. These questions can provide you with insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.
Q  What was the Evergrande crisis will the market see a big fall? How will be the impact on the markets comparison between Lehman and Evergrande crises?
Parimal Ade:

Evergrand is a fortune 500 company. This is a Chinese company dealing in real estate company.
• It is always in No. 1 and No. 2 positions. Now it has come with many problems.
• There is a debt of more than 300 billion dollars. As there was debt repayment last week they couldn’t make the payment. So they have given the extension to repay the debts in the next 30 days. Now need to see after 30 days.
• In a way, this is a default. There could be a cascading impact if the loan is not repaid.
• People are comparing this crisis with the Lehman crisis.
• More than 1300+ projects are going on. The projects are more than 280 cities.
• In China, currently, the situation is like that there are empty houses which are known as ghost towns. This has happened because of artificial demands.
• This company is not just in real estate they have made a lot of diversification.
• The US is a consumption-driven country.
• It is said that the whole world is running due to the consumption of the US. As this country is a net importer country, not a net exporter country
• The US is an open economy, it is a capitalistic economy nothing is hidden there. In that case Chinese economy everything is closed it is not known what is going on in China.
• When any such events in the US are net consuming country then the cascading impact is more on the market.
• But China is a net exporter country as there is no deficit. China’s dependency is more outside rather than itself from the business point of view.
• If slow down comes in China then the import done by India majorly is commodities. There could be a positive impact on India as the price will come down.
• If this happens then there could be hiccups in short term but it will add a good amount of value.
• As the whole world was dependent on China after COVID everyone is thinking China + 1 strategy which means the world is looking for another alternative country to get the demands completed.

Q  Have got a 40% return on my holdings to need Money next year for some big payments. Should I sell my holdings now to preserve the amount?
Parimal Ade:

• Yes, you need to sell.
• As it is recommended that within 3 years you need to take an exit from the fund.
• 40% return is a good amount of return.
• As this is time to fulfill the financial goals.

Q  View on Avanti Feeds?
Parimal Ade:

• Things are good for this particular company.
• How this business is growing it is seen that there is an organized play in it.
• Therefore visibility is good. Need to see the financials.

Q  Your view on PPF investment?
Parimal Ade:

• If the investor is in between conservative to moderate kind of investor. Then this will be a good investment avenue to add to the debt side of the portfolio.

Q  How much cash should one keep for buying stocks during future market corrections. Is there any thumb rule for how much to buy for how much correction?
Parimal Ade:

• From a Financial Planning point of view. The investor is trying to optimize the returns.
• Nobody knows how the market is going to behave.
• It is a suggestion if markets have given a good amount of returns in the trailing 12 months.
• It is always better to have a staggered way of approach.
• Invest 30% lump sum and the rest 70% take allocation in the next 12 months.
• If the market falls then there is liquidity available. Here behavior management should be more.
• Otherwise, there can be an asset allocation strategy.
• Also need to rebalance the portfolio when the desired rate of interest is achieved.
• One should need to keep rational expectations from the invested avenues.

Q  View on the liquid fund? When to choose it and when to ignore it, and what should be ideal tenure?
Parimal Ade:

Liquid Funds have generally 30 days in our maturity period.
• It will give the returns as per the short-term rate of interest.
• The expectation should not be more than 4% to 4.5% from these funds.
• Follow Good Credit Quality Liquid Funds.

Q  Is CAMS not good for the long term?
Parimal Ade:

• It is not said that CAMS is not a good investment.
• The problem is with the valuation and the industry.
• In the industry, the expense ratio has come down.
• They are doing a lot of good things also they are taking the help of technology.
• Growth Visibility is good, but growth in earnings is a matter of concern.

Q  Is it right to carry out SIP across all equity classes? Will it lead to over-diversification risk?
Parimal Ade:

• This depends on the investment horizon.
• There should not be more than 5 funds.
• With a good amount of diversification and rational return expectation with 12% to 15% then there should not be a problem.

Q  Holding Idfc shares. Do you think post telecom reforms VI will default on Idfc payments in FY 22 assuming promotors don’t infuse extra capital?
Parimal Ade:

• The default might not happen.
• As VI had got the relief of cash flow of Rs 4 Lakh Crores.
• There could be an infusion, Initially, there were negative reactions from Vodafone. But now as per Mr. Thakkar who is managing Vodafone Idea told the promoters can infuse money.
• The payments of banks will come. Initially, the worry is not there currently. Hence the market is also trying to discount.
• The provisioning that has been done by the bank will also be free very soon.

Q  View on GSPL?
Parimal Ade:

• There are lots of ups and downs in the gas sector. So the same impact is also seen in this stock.
• Passing on the cost is the problem. There could be some problems in these stocks for some time.
• The government is planning to have a 15% from 6% market share.
• There is organic growth in this sector.

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