The concern stems from the Indian stock market, which has been on a run of hitting lifetime highs over the past two weeks. “Is the market expensive? Yeah, definitely! They are a bit overpriced. We maintain the 50 per cent hedge in our portfolio,” Kamath told ETMarkets.com.
Kamath in his role as the chief investment officer and co-founder of True Beacon, a city-based alternative investment fund, is one of the few voices on Dalal Street that has persistently maintained a bearish outlook on Indian equities since the early months of this year.
His main concerns stem from the detachment of the stock market from fundamentals as well as the staggering pace of initial public offerings in the country’s primary market. “Tapering should have deep implications on the market, but right now it is not happening, which is a bit weird. We just have to wait and watch. We are fairly bearish,” he said.
While Kamath’s views on the Indian stock market may be bearish, his fund has not suffered from that contrarian outlook. In Kamath’s own words, there has been no backlash from investors over his alternative investment fund (AIF) holding a greater than 50 per cent hedge against their positions in the stock market.
“We are a conservative place, where we don’t care about losing the last bit of alpha when markets are expensive… we have not seen much of a backlash from our clients on the strategy,” Kamath said.
TrueBeacon grew its assets under management by a cool 10 per cent month on month in July, helping its total managed assets to grow near the Rs 1,500 crore mark.
For Kamath, any meaningful correction in the equity market will have to be led by global markets. Globally, equities have been on a tear, as investors are able to look past the ongoing concerns over the Delta variant of Covid-19 and slowing growth in China, because of promised continued support from central banks and improving corporate earnings of major companies.
For Kamath, the bigger risk is inflation because of the exorbitantly loose monetary policy of central banks around the world, including India. “The US economy losing its relevance in geopolitics is a big risk. They have been very callous in the way they have been printing money over the past decade,” Kamath said.
