ETMarkets Smart Talk: Interesting opportunities in long-term government bonds market: Amit Goel

“We are a multi-asset AMC and are always looking for opportunities to enhance risk-adjusted returns for our clients. For now, we see interesting opportunities in the long-term government bonds market,” says Amit Goel, Co-Founder and Chief Global Strategist at Pace 360.

In an interview with ETMarkets, Goel said: “we would advise investors to reduce their holdings in Indian equities and take advantage of opportunities which are emanating in other asset classes,”. Edited Excerpts:

Sensex@75K, Nifty@22K – should investors be worried or do you see FOMO in the market? Where do you see the market headed?
Amit Goel: Yes, we do feel that because of the last 13 months in general and the last 6 months in particular, there are investors who fear they might miss out on some profitable opportunities due to the outsized bull moves.

However, we believe that the Indian markets, at their current levels, are one of the most overvalued markets in the world.

.jumptextrow, .jumplinkwrap{margin:15px 0;}
article.artData .artText table td {vertical-align:middle}

Unlock Leadership Excellence with a Range of CXO Courses

We believe that Indian stocks are one of the greatest bubbles ever in the history of global capital markets. We anticipate that over the next 3-4 years, huge downsides are going to open up in Indian equities.

The imminent global slowdown will only make things worse for a market which is as high beta as the Indian market is. In each of the major bear markets of this century, the Indian market has been one of the worst-hit among all major global equities.

You Might Also Like:

ETMarkets Smart Talk: Nifty seen @ 24K in 2024; Nishit Master highlights 3 risks which could derail bull rally

We expect something similar to happen around this time as well. Hence, we would advise investors to reduce their holdings in Indian equities and take advantage of opportunities that are emanating in other asset classes.

What are you suggesting to your clients now? What are the general queries that you are getting?
Amit Goel: Some of our large family office clients are getting a little worried because of the overstretched valuations in equities and hence are asking us if we have any viable opportunities for them outside the realm of Indian equities.

We are a multi-asset AMC and are always looking for opportunities to enhance risk-adjusted returns for our clients. For now, we see interesting opportunities in the long-term government bonds market.

Apart from that, we should be investing in equities if and when there is a deep correction. At that point, if we believe that equities present a short-term to medium-term opportunity to go long and then subsequently book profits.

You Might Also Like:

Fund Manager Talk: Inflows into small and midcaps ahead of earnings, says Ashish Naik of Axis Mutual Fund

We have also been extremely bullish on gold but have used the significant rally in the last few weeks to prune down our holdings. As and when precious metals correct, we would be looking for opportunities in that space as well.

What could derail the bull rally in FY25? Any important factors that one should watch out for?
Amit Goel: We believe that the equities rally will derail in FY25 because of extremely overstretched valuations, impending US/global slowdown/recession, and misses on extremely rosy projections that investors have for India\’s GDP and corporate earnings for this fiscal year.

We are already seeing outflows from small & midcap funds – and inflows into equity funds also saw a decline. Are MF houses booking profits or staying cautious?
Amit Goel: Mutual fund houses are on the cautious side because of the recent run-up and overstretched valuations. However, because of the specific mandate they have to predominantly stay invested in equities, it gives them very little leeway to increase cash allocation.

If they try to hide behind defensives, it may not work because traditional defenses like FMCG and Pharma are overpriced themselves.

You Might Also Like:

ETMarkets Fund Manager Talk: Not found many opportunities in PSU stocks, says Krishnan VR of Marcellus

That\’s why investors should consider a genuine macro top-down multi-asset PMS rather than either staying invested or increasing their allocation to equity funds because the fund managers, even if they are cautious, may not be able to provide significant protection against a vicious bear market which we expect to materialize over the next 3-4 years.

SIP amount stays above Rs 19000 cr for the second month in a row. Where do you see the monthly contribution headed in FY25?
Amit Goel: We expect the SIP run rate to inch up a little more over the next 3-4 months because of the optimism about Indian equities and the increase in financialization of domestic savings.

However, in the second half of FY25, the SIPs may begin to plateau or even fall as the equity markets become decidedly bearish.

Gold surpassed Rs 72000 per 10 gm in April and Silver surpassed 82000 per kg – record highs. Where is the yellow metal and Silver headed?
Amit Goel: We remain bullish on precious metals for the next 3-4 years. However, the recent run-up has made both of them extremely overstretched, and they can correct by 4-6% over the next 3-4 months.

Hence, we have booked some profits in this space and would look to buy back only when there is a cooling down of the precious metals market.

What will work in FY25 – which could turn out to be a volatile year for investors amid elections, US Fed interest rates as well as crude oil prices?
Amit Goel: We believe that for the next 3 years, investors would be well-advised to shift a significant portion of their financial wealth to a macro top-down strategy, which would protect them from the downsides of the bear market in equities and simultaneously help them to juice the returns from bullish opportunities in other asset classes.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)