Investment FAQs with Parimal Ade (Investment Satsang- 04)

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Here are some questions asked by the viewers in the Investment Satsang dated 23rd April 2021 and 30th April 2021. These questions can provide you 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 How should be the initial planning at the age of 30,40,50s and the retirement?
Parimal Ade:

• The planning of the goal should be done based on the short term, medium term, and long term.
• Based on the at the allocation and type of fund should be selected.
o In the Short term, Allocation can be done in fixed income securities
o In the Medium-term, a Hybrid kind of portfolio can build such as Equity and debt with 3-5 years of the horizon.
o In Long Term (If 5yrs + term ) the allocation should be on the equity side based on the sector choose Large Cap (5-7years), Multicap (7-10 years), Small and Midcap (10 years+).

Q View on the asset class in India apart from gold, stock, debt, real estate as compared to stocks and cryptocurrencies?
Parimal Ade:

• As there is no proper regulation related to cryptocurrency opting for it is not advisable.
• The gold, stock, debt, and real estate are good for asset allocation.

Q Safest and most liquid way to invest in gold in India?
Parimal Ade:

·        The safest way to invest in gold is digital gold, gold funds, and gold ETFs
·        For long term sovereign, gold bond looks good as returns are given will be up to 2.5% which is tax-free.

Q What Portions should be given for US stocks for the long term?

Parimal Ade:
·        10 to 15 % of the allocation can be done for US equity.
·        Due to the increase in US taxation point negativity can be seen.
·        The next decade will be for the emerging market.

Q Why are REITs falling?

Parimal Ade:
·        As there is work from home culture going on, the rental business could build some pressure from corporates.

Q View on Maruti and Eicher Motor?
Parimal Ade:

Maruti is down by 20% from the 52 week high.
o It has lost the market share of 4-5%
o No strategy on electric vehicles
o Only Conservative investor can go for it
• In the case of Eicher Motor still, a lot of growth can be seen due to aspirational branding

Q Those who have invested in IDFC first bank how long they have to wait for returns?
Parimal Ade:

• Due to the increase in NPA, the banking sector is going through pain.
• The retail portion can go to 80% till September.
• It’s an aggressive stock
• Conservative and Moderate investors should avoid these stocks.

Q Views on Reliance?
Parimal Ade:

• They are having 2 growth engines JIO and Retails.
• It is not overpriced stock.
• The market is waiting for the IPO of Reliance JIO and retails.

Parimal Ade:

• Both the banks are good.
HDFC Banking is aggressive on wholesale banking and corporate banking as well.
Kotak Bank’s Subsidiaries are available so value unlocking can also be done.

Q Views on Muthoot Finance?
Parimal Ade:

• Positive View.
• Good growth potential is available.
• No NPA pressure on the Company.

Q What is the concern related to Biocon?
Parimal Ade:

• Stock stagnancy in terms of profitability in the last 2 years.
• Median PE ratio of 3years and 5 years is rallying on the upper side.
• Employees as a stakeholder are not happy.
• Stock has performed well for the last 1 year due to the pharma company rally.
• There is consistency in profitability but growth is the concern with the pharma industry.
• Funds are not diverted for research and development.

Q Medium and long-term view on the banking sector?
Parimal Ade:

• Banking industry looks positive in the long run.
• Due to increasing in NPA numbers the next 2 quarters need to be cautious
• Positive on private banks for the next 10 years.
• Private banks may take maximum market share as compared to PSU Banks
• Currently 30-35% of private banks and 60-65% is PSU bank hold are there in the market. But this will be exactly the opposite in the tenure of 10 years.

Q View on general market valuation, the future earning will drive the market further or correction can be expected?
Parimal Ade:

• Earning growth was good in Q4 and even in Q1 FY22
• FY22 and FY23 ESP of Nifty could touch between 700 to 800.
• As it is seen the forward PE has already come down to 20 that’s how the market perception is going on.
• Earning for FY23 will be a robust year
• Correction may be expected about 10-15% for 52 weeks high because of the second wave.
• Previously a correction of 40% that had happened will not happen again.

Q Views on SAIL?
Parimal Ade:

• Steel Industry looks good.
• Currently it is going on the peak and don’t know when it will reverse.
• It is better to invest if there is deep knowledge in the steel industry.
• SAIL is slow as compared to other steel players

Q View on TCS?
Parimal Ade:

• It is the market leader.
• It has rational expectations on the stocks that are trading on the upper side.
• Stock can go into consolidation.
• Trading on premium valuation.

Q Where to invest lumpsum for regular quarterly income in these hard times, can the money be put in REITs, Ultra Short Bond funds, and liquid funds which will return 7 % pa?
Parimal Ade:

• Ultrashort funds and liquid funds will offer returns up to 4-5% or max up to 6%.
• REITs & InvITs can fulfill this as the option.
• Hybrid funds are a good option to invest.

Q View on VIP industries sales, profits, and stock price return to pre-covid level?
Parimal Ade:

• Company is going through a difficult phase not because of their problems but because of covid problems.
• These industries will be there for the long run
• The debt to equity ratio is more up to 0.74
• This difficult situation will go for 1 more quarter.
• Uncertainty in earnings.

Q View on HCL tech?
Parimal Ade:

• Q4 results had gone down Year on Year due to the milestone bonus was given to stakeholders to keep them happy.
• Trying to reverse the iteration by the company.
• FY 22 guidance has been given which is good.
• They have won new deals.
• HCL tech will be the dark horse of the IT sector.
• Valuation point compared to other companies it trades with a low premium price.
• It is a media-shy company but consistently performing.

Q Compared to other sectors, the IT sector is growing because of excess liquidity will it sustain?
Parimal Ade:

• Deals in last financial year was good
• There is 15% earning growth.
• Nature of the IT sector can go well.

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