Speaking at Times Network India Economic Conclave, Sharma of First Global said at one level the market is showing bearishness due to the HDFC Bank merger and inflation, but on the other hand, there is a stealth bull market in the smallcaps.
This, he said, reminds him of his favourite Mohammed Rafi song: “Khulli palak mein jhoota gussa, band palak mein pyaar, jeena hai mushkil.”
Explaining the song to Mark Mobius, a veteran investor, and to the audience, Sharma said the song suggests: When you speak, you are using a very negative language. But in your eyes, I can see true love.
“This is what I see in the stock market,” he said.
Sharma said the next big theme in the stock market is the smallcap space. Some smallcap stocks with PE of 5-10 times have robust business models, he said, adding that India is a quality market with quality companies and that the world has always found India markets expensive.
Sharma said he has no interest in largecap names such as HDFC Bank or Hindustan Unilever as he finds the stock as “yesterday’s stocks”. Large companies need a far larger tailwind to grow from here, he said.
“ESG is an important criterion to look out for. Companies that clean up the environment are a great area to be in,” Sharma said.
He added that the flow of capital has few homes today in this world, whether one talks about FDI or FII flows or the debt market, and that India is in a sweet spot. “Almost every factor that you look for in an investable market is right here in India,” he said.
