India will continue to be an outlier and outperform global market: Pankaj Murarka

“This year the index is up 5% and India has been one of the very few outlier markets globally. The outlier trend of equity markets is not just a one-off event. It is probably the beginning of a trend where given the fact that India’s growth will be much better than most of the advanced economies, we probably should see this trend continuing and the Indian market continuing to outperform global markets,” says Pankaj Murarka, CIO, Renaissance Investment Managers

What is your resolution and what is your New Year plan for the market?
I think it is a pretty healthy end given all that we have gone through during this year. This year the index is up 5% and India has been one of the very few outlier markets globally. The kind of upheaval we have seen in the geopolitical environment and the kind of economic challenges that the world has faced, given the steep increase in interest rates and the significant FII selling through a significant part of this year.

This year, really is an acknowledgment of the fact that India is an outlier economy and I think investors have taken a note of it and more importantly domestic investors have shown resilience during the course of this year by investing into Indian equities and which is why we could go through this year with moderate losses during the middle of the year and despite sharp FII selling.


It clearly tells us that the Indian market has matured. This year has a significant message or implication for the market going forward and for me. The outlier trend of equity markets is not just a one-off event. It is probably the beginning of a trend where given the fact that India’s growth will be much better than most of the advanced economies, we probably should see this trend continuing and the Indian market continuing to outperform global markets.

Last year, you said SBI would probably be the stock to watch out for. It definitely has been a great one, one and a half year for PSU banks but are you surprised by the move in some of the other PSBs? What do you make of the rerating of the entire PSU pack with the index 80-90% up?
Yes, that is true but we have to see it in the context that these stocks had lost 70-80% of their peak value over the last six, seven years, given that the PSU banks went through a very deep NPA cycle and the kind of de-rating these banks have had because of investors not wanting to invest into state -owned companies or enterprises.

Given the recurring capital infusion by the government in these banks, which has been significantly book value dilutive to minority shareholders.

So when they rise 100% after falling 90%, these are still 80% off the peak. It has been a bounce from very low levels or deep value at which these stocks were trading. There is hardly any institutional participation. The fact remains that most of these banks are delivering much better numbers in terms of their performance.

The last part of this rally I think has been driven by retail and HNI investors because I do not think we have seen any institutional participation in these names. Having said that, there is still significant value in a lot of these names.

Going into 2023, we will start to focus on what is happening and how things are moving. One interesting trend in the last couple of months has been that a lot of supply came for Paytm, Policy Bazaar, various other companies. Where do you see these companies?
Well that is a difficult call to take. There would still be private equity investors who would have invested into these companies much earlier as these companies have gone through multiple rounds of funding over the last seven to 10 years. These investors might be wanting to cash out either because they want to take their money or book profits or closure of their funds.

If you ask me what has been the story for this year, I think at the start of the year, there was a lot of enthusiasm and euphoria in all the internet or technology names and there was gross mispricing of the IPOs of these companies and now when we end the year, we are at a state where no one is really looking at these companies and investors are disenchanted about these companies.

Valuations have become far more reasonable in the context of the nature of growth that these companies can deliver over the next five, seven years. Some of these companies offer a reasonably compelling investment case for investors who are willing to take a medium to long term view and in that context, even if there are some more sellers or people wanting to take their money out, I am sure there will be enough buyers for them. That does not concern me a lot.