Has The Market Bottomed Out? Sandeep Tandon's Stock Market Analysis & What Lies Ahead

[00:00:00] Speaker 1: Sandeep, great to have you with us. Wishing you a happy Diwali from all of us at NETV family. And it's interesting to hear that you were actually preparing to come here and present something. [00:00:12] Sandeep: I was told. [00:00:13] Speaker 1: Mike. [00:00:14] Sandeep: I was told it was a small presentation. [00:00:17] Speaker 1: No, okay. So I think we're going to take insights from your presentations as well. You know, the way and the time that we are sitting in, it's a very fascinating juncture in terms of where markets are concerned right now. I mean, valuations, if you have to look at Indian markets, absolutely cooled off in terms of multi-year highs that where we were at. But if you have to compare ourselves to global peers, we're still expensive. And at that point in time, you're already seeing geopolitics, which is absolutely paying spoilsport. You have domestic investors who are probably on the front foot. FIs, not real interest in Indian markets as well. And you have the AI narrative, which is at play right now. How would you actually describe where we are standing at right now? [00:01:07] Sandeep: Tough question, but I'll still try to answer that. Okay. See, let's understand. I look at a lot of data more from a behavior perspective. Okay. And if you just go back and recollect what happened in March, 2026, not very far away, six months back nearly, we are talking about. It was something similar situation. People have given up some sort of capitulation we have seen in the market and certain stocks. And capitulation in terms of thought process, the bullish thought process also got capitulated. I have never seen this level of negativity about India globally. That people say, let's not talk about India. There are other opportunities. Okay. So, when you observe these things, it gives you different perspective. I always say in life, don't look at everything on absolute basis. Relatives are more important. Okay. And frankly speaking, returns are also relative. So, everything, we as a student of theory of relativity, we believe everything we should look at relative basis, then you give you a better perspective. So, let's talk about where we stand right now. So, obviously, last two years has been a difficult time for us. We were, on the relative basis, we are doing extremely bad. Now, given the global background and turmoil which we have seen and anti-AI theme which gathered momentum in between, we are better off. Okay. On the relative basis, we look much better now as compared to what we were two years back. Valuations are relatively much better than what was two years back. And what is very important is that we believe that worst is price in India, best time is yet to begin. So, worst is behind us. Whether you talk about rupee-related challenges, you talk about the crude-related thing, or what is happening on the Indian macro. In fact, irrespective of the general belief, we believe that a lot many macro picture for India is actually improving. So, a lot of high-frequency indicators are endorsing that. Which means I will be more constructive. In the month of August, we talked about that September-October will be very challenging globally, and which played out well. I think that phase is in our final stages. So, I expect that things look slightly better. I don't know about next three years, five years, ten years perspective. In a highly spiky geopolitical volatility period, I think let's look at it from the next three months perspective. The data points are much more constructive. I am more, in fact, we are largely deployed, except the small cap fund, which we manage. We have still some amount of cash. But you have to be very stock-specific, sector-specific. We are not seeing any specific themes. Sometimes irrationality is on the higher side. So, we have to identify some of these inflection points, which is there in the market. And if you can capitalize these inflection points, I think you will generate alpha out of it. It's a broader thought process. [00:04:11] Speaker 1: Sandeep, that's encouraging to hear that at least short-term, you're seeing some bit of possibility of investments coming in. Now, you've often spoken about looking at a journey where you look at valuations. You're looking at the risk appetite. You're looking at the timing and you're talking about liquidity. That's where your entire model rests, right? If you have to look at the next 12 months as an investor right now, what is the liquidity situation actually telling you? Because valuations, we know where they stand. The question is, what is the liquidity telling you? Because it's domestic-driven liquidity and not a FII-driven liquidity. [00:04:52] Sandeep: So, I don't think liquidity analytics is just tracking the FII number which comes every day in the evening. That's not the way we define liquidity. The way we look at it is that if I have to talk about first on the risk appetite, then I'll come to the liquidity part because both have some amount of interlinkages. India risk appetite has been drifting down in the last two, three months particularly and as compared to what happened in, let's say, somewhere between February to July 2024, one of the higher levels. Since then, it is drifting down. Now, we are closer to the lower levels, which means the probability of uptrend is on the higher side. That's the first thing on the risk appetite is reaching the lower boundaries, which gives me a lot of comfort. As per liquidity is concerned, India liquidity is also marginally rising and I will see if I have to look at from the way you look at data from the FII perspective, we are seeing signs of exhaustion on the FII side also. We are seeing selling exhaustion and if I have to say in last two months particularly, the FPI selling from long account has come off significantly. In fact, some of the names who are big names in the global long side actually are buyer in the India, okay. The only thing is it is not visible up to that extent in numbers because good amount of passive selling was also there. So, but if I have to break into passive and traditionally long account, I think long account buying is big in India, which is a good news. And given the background, the steps amount which RBA has taken and I think worst is behind them from the rupee perspective also. I think background of liquidity and risk appetite both are more constructive and obviously valuations have corrected a lot. It gives me some amount of comfort that things will only improve from this level because we as a market partner is saying everybody has given up, okay, when we see the science of capitulation, nobody wants to talk about even bullish tone also, okay, and that's a perfect time to rebalance your portfolio. [00:06:55] Speaker 1: So, are you seeing a change in cycle happen because you've been known as a man