“What’s happening is that the market is becoming very narrow and is searching for pockets where the downside is limited. It’s also looking for certainty in earnings growth. Even companies that posted strong earnings in the first quarter—but haven’t provided clear guidance on the sustainability of those earnings—are getting punished,” says Anshul Saigal, Founder, Saigal Capital
I cannot take my eyes off LIC. I don’t recall the last time the stock moved up by about 4%. It’s already trading around the 920 level.
Anshul Saigal: Yes, the insurance space in general—and this company in particular—has delivered robust numbers. The outlook they’ve shared has also been quite strong overall. As a result, the sector is gaining some momentum in terms of price appreciation. What we’ve also seen is that, for the better part of the last two to three years, these stocks have largely gone nowhere. They’ve consolidated, ownership is limited, and there’s room for new investors to step in and buy. With the positive commentary, we’re seeing that play out in real time, leading to this price appreciation. So it’s really a combination of strong commentary, good results, and low ownership.
Is there a tactical trade in FMCG or staples across the board, or would you suggest avoiding them, given the mixed bag of results where not every company has delivered strong numbers?
Anshul Saigal: What’s happening is that the market is becoming very narrow and is searching for pockets where the downside is limited. It’s also looking for certainty in earnings growth. Even companies that posted strong earnings in the first quarter—but haven’t provided clear guidance on the sustainability of those earnings—are getting punished. We’re seeing stocks fall 5–6% even on good numbers. On the other hand, companies and sectors where growth stability is evident and which have a more defensive nature are drawing investor interest. This is typical behavior in a nervous, uncertain market. We’re seeing this play out even in the consumer staples segment—stocks aren’t falling much despite tepid commentary, because the market wants to gravitate toward these names to minimize downside risk.I’d like to explore another area of consumption—discretionary spending and leisure. One stock that’s been doing very well after a strong Q1 performance is PVR-Inox. It was up 4% yesterday and another 3% today. What are your thoughts on this theme—discretionary spending on leisure, travel, tourism—and how do you see this trend shaping up?
Anshul Saigal: Travel and tourism are extremely strong right now. We’re witnessing a trend that’s been a long time in the making. In fact, for most of the last decade—between 2010 and 2020—there really wasn’t much of a play in that segment. It took nearly 15 years for hotel rates to return to their 2008 levels. That shows you the extent of the consolidation this sector went through. Now that we’re emerging from that phase, there’s a significant amount of catch-up potential ahead of us. We believe this trend will continue for a long time.
I cannot take my eyes off LIC. I don’t recall the last time the stock moved up by about 4%. It’s already trading around the 920 level.
Anshul Saigal: Yes, the insurance space in general—and this company in particular—has delivered robust numbers. The outlook they’ve shared has also been quite strong overall. As a result, the sector is gaining some momentum in terms of price appreciation. What we’ve also seen is that, for the better part of the last two to three years, these stocks have largely gone nowhere. They’ve consolidated, ownership is limited, and there’s room for new investors to step in and buy. With the positive commentary, we’re seeing that play out in real time, leading to this price appreciation. So it’s really a combination of strong commentary, good results, and low ownership.
Is there a tactical trade in FMCG or staples across the board, or would you suggest avoiding them, given the mixed bag of results where not every company has delivered strong numbers?
Anshul Saigal: What’s happening is that the market is becoming very narrow and is searching for pockets where the downside is limited. It’s also looking for certainty in earnings growth. Even companies that posted strong earnings in the first quarter—but haven’t provided clear guidance on the sustainability of those earnings—are getting punished. We’re seeing stocks fall 5–6% even on good numbers. On the other hand, companies and sectors where growth stability is evident and which have a more defensive nature are drawing investor interest. This is typical behavior in a nervous, uncertain market. We’re seeing this play out even in the consumer staples segment—stocks aren’t falling much despite tepid commentary, because the market wants to gravitate toward these names to minimize downside risk.I’d like to explore another area of consumption—discretionary spending and leisure. One stock that’s been doing very well after a strong Q1 performance is PVR-Inox. It was up 4% yesterday and another 3% today. What are your thoughts on this theme—discretionary spending on leisure, travel, tourism—and how do you see this trend shaping up?
Anshul Saigal: Travel and tourism are extremely strong right now. We’re witnessing a trend that’s been a long time in the making. In fact, for most of the last decade—between 2010 and 2020—there really wasn’t much of a play in that segment. It took nearly 15 years for hotel rates to return to their 2008 levels. That shows you the extent of the consolidation this sector went through. Now that we’re emerging from that phase, there’s a significant amount of catch-up potential ahead of us. We believe this trend will continue for a long time.
As for cinemas and movie-going, it’s going to be very situational. If there are good movies playing—we’ve seen one or two that turned new actors into overnight stars—then the sector gets a boost. But overall, I don’t view this space as a secular long-term buy. OTT platforms are having a real impact. Even when I personally go to the cinema—like recently, I watched that Formula One movie—the hall was half empty despite it being a fantastic film. That tells you there’s interest, but it’s clearly waning. That’s why I wouldn’t be a structural or long-term bull on this space.