You had bought a lot of PSU stocks. How many of the PSU stocks which we have discussed in the past are you still holding?
Holding exactly three PSU stocks. I will be honest to you. I shared with somebody else also that I actually used to go to the bathroom and slap myself on the face and saying all your education is pointless! You knew what was going to happen and yet you put your money in PSU stocks! It does not work and that is the point. I hold about three PSU stocks today, two in oil, one is in aluminium, that is all. Everything else has gone.
I have vowed never ever to buy a PSU stock again — whether it goes up or down. It does not fit into the returns and serves me right to be thinking that I am too smart. In terms of value, they did not pay out and I will be honest, it was a disastrous decision.
You bought into some of the niche technology companies for 2021. What kind of orientation are you likely to keep for the money which you have managed — your personal money and your client facing money?
First, it is very important to be diversified and have at least one-third of the portfolio in US stocks directly or indirectly. You have to diversify out of India into global companies because you do not get access to those companies in India. So, that is the one big aspect of the management.
Second, we believe that the metal story will continue for the next 12 months at least and therefore it will not be a good idea to get out of metal at this point of time. We will see several such cycles coming in the metals and you need to start capitalising on the metal story. That is the big story.
Third segment involves consumer-facing stories in India. The liquor stocks in this country will get rerated because led by the Delhi government, there will be a tremendous amount of rethinking as to what we think about liquor trade in this country. It has underperformed for the last five years for all the reasons that we know about. But it is going to be a big trade going forward in this market.
You, of course, do not get rid of technology stocks. But get rid of companies that have less than Rs 500-crore turnover. We will miss some stories and that is alright with us. But we will not be caught in a market with investments in companies below 500 crore turnover.
What about financials? Should we probe into that segment of the market? We have had a slew of Q2 updates coming in, which seems to be quite promising?
There could be a lot of traction in smaller banks but that is going to be the biggest value trap ever. Today technology is driving banking more than just pure banking. The smaller the bank, the less you can spend on technology. So, if I were holding my money in the bank, I would rather put it in the larger of the three-four banks in India than in the bank with a capitalisation of Rs 3,000 crore which cannot invest in technology. Your money is going to be at the biggest risk in such a bank, not because the bank will make wrong decisions but because they are not going to be able to invest in technology to protect your asset.
Cyber threat is going to be the biggest aspect of banking and where you put your money and how you use your credit card is going to be important. Therefore the top three private banks are the safest plays to be for you. All our holdings are in the large banks we shall not take up to smaller banks and put our money to risk.
What has really come up from behind and taken you by surprise in terms of the kind of buying interest it has witnessed? Anything that stood out even from the broader markets?
What surprised us most were the metal stocks. Their climb has been incredible. Whether it is steel, Vedanta, NMDC or Nalco, their climbs are astronomical in an economy which still has a negative 7% growth rate and does not look like having more than 5-7% or may be a little higher next year.