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Dhirendra Kumar, CEO, Value Research, says almost one-fourth of the SIP money is coming by way of private sector and NPS and NPS is not 15% equity. It is 75% into equity and that too into only top 200 stocks, and that has not been noticed by investors and is not being talked about because it does not come in large numbers by individual checks. It just comes by way of the employers remitting the money from the deduction month after month and the growth rate of that is phenomenal. What is your advice when it comes to new entrants in the markets that have come into the equity class but have not come into the debt segment as yet. What do you believe is the USP here or what would be the advice to some of these new entrants?Dhirendra Kumar: I have been telling the investors, but nobody has followed me. I always encourage people to start with an aggressive hybrid fund simply because most investors are getting attracted to the market just looking at the upside and they may not be ready for the intermittent big declines on an ongoing basis and this is where the funds come into play very nicely. They will not give you the heartburn which might look imminent at any point and it will happen in the next three, four, five years, there will be at least 10 occasions when the market will fall so sharply that it will scare most of the new entrants, so start with that, else not, else, make sure that immediately after investing you are not looking at the NAVs on a day to day basis. I would also like to give you one context. If any investor has invested in a smallcap fund by way of SIP over any three- to five-year period, one has beaten fixed income by a handsome margin. Let’s stick to very broad mega trends. Mega trend number one is SIP and I am assuming that somebody starting SIP at least has a five to seven year timeframe in mind, otherwise it is not a SIP, then it is more like a trade here or there. A genuine SIP investor can think in terms of not months and quarters, but in terms of years and has a five-year plus time horizon and if the starting point is today, should one still stick to SIP investing in equities?Dhirendra Kumar: Absolutely, most people think that SIP is for return only. It is not that. The convenience of SIP, the cyclicality of SIP, the potential of SIP does not really scare you. Sometimes when the market falls, most long-term SIP investors feel happy that they are able to buy cheap. Not only that, for its simplicity and practical context, utility that you earn every month, you pay your EMI every month and you save every month. Otherwise, historically, what has been happening is that you are saving in your bank account and at one point where you have Rs 5 lakh, Rs 1 lakh, then you think of investing. Here, you are able to average it and it has become convenient. The money moves out of your bank account and so, also we are talking about large SIP, the growth of SIP. But when you look at it in the context of the Indian middle class and all the number of iPhones sold and the number of 20,000 plus smartphones sold in this country or all other kinds of spending that we get to know about, SIP is virtually in its state of infancy and that too also has been perceived differently. Everybody has just tried it out, tested it, it is just kicking the tyres. I think we are in very early stages and if this continues, there will be a problem in terms of having the supply side because the relative scale of the market or the liquidity in the market or the breadth of the market is not good enough to absorb and there is a problem in terms of the depth of the market to be able to absorb sustain right, because it is just not SIP. It is also the NPS money. If you look at another side, it is almost like one-fourth of the SIP money is coming by way of private sector and NPS and that NPS is not 15% equity. It is 75% into equity and that too into only top 200 stocks, so that is something which has not been noticed by investors or not being talked about because it does not come in large numbers by individual checks. It just comes by way of the employers remitting the money from the deduction month after month and the growth rate of that is phenomenal that has gone unnoticed. Let us then close it with one actionable advice, which is that if you decide to change asset allocation during euphoric times, which is 2000 when TMT bull run was crazy, 2007-2008 when this entire so-called old economy infrastructure boom was at play, they were rewarded with the prudent choice of making some shifts here and there. For somebody who has got a large asset allocation to equities, which purely has become large because of the appreciation, is it time to rein in or is it time to continue to ride on? Dhirendra Kumar: It is time to rein in because the last three-four years have been so extraordinary that everybody just came on board post COVID and then have been in a state of market and mind that you have missed the bus and you should not exit. Think of asset allocation if you do not have one. If you do not have asset allocation, you will not get an opportunity to rebalance. You will only watch it go up and down and the first-time investors who have come in the market in the last four-five years will be greatly disappointed because they have not seen any blow so far. So, if you have no fixed income, have 20%. If you have some fixed income, make sure that it is 33% and you are actively keeping track of it and rebalance it. Define your rebalancing rule that if there is a shift of more than 8%, I will rebalance. Do not do it on every change but do that and if you are able to frame that rule, document it, keep it on the tagboard to remind you on an ongoing basis, and that will enhance your return and you will be able to capitalise on all the intermittent opportunities that come your way.

Kumar Rakesh, Associate Director, Equity Research, BNP Paribas says one should expect a much weaker set of auto sales numbers in September as half of the month came under the inauspicious Pitru Paksha where new purchases are nor made. Within that, the passenger vehicle industry has been moving towards low single-digit, flattish, sort of a number so far the financial year to date. That is largely a reflection of pent-up demand drying up and the wholesale demand adjusting to new levels. Further, while a lot of dynamics has played out in the electric two-wheeler industry, a lot is yet to play out in the coming years as this penetration continues to move up. It would be fair to expect that the market share can continue to churn between the players. What to expect for the monthly sales from September because passenger vehicles in have seen a bit of a dip down and a gradual one at that in the past few months.Kumar Rakesh: In September, half of the month would have gone into a period which is called Pitru Paksha when not much consumption is done. So, for most of the segments of the automotive industry, we would expect a much weaker number. Last year, bulk of it was in October and so there would be a base effect which will make the sales number look quite weak and hence I think that is something which investors would be preparing themselves for that there could be a weaker set of number coming into September that also implies that October month becomes quite critical for the industry because most of the festivals are falling in October and bulk of the festival demand will show up in the month of October instead of getting spread across September and October the way it was last year. So, going into the September sales numbers, one should expect a much weaker set of numbers. Within that, the passenger vehicle industry which you spoke about has been moving towards low single-digit, flattish, sort of a number so far financial year to date if we see and that we think is largely a reflection of pent-up demand drying up and the wholesale and demand now adjusting to new levels. It takes a few months for the automotive companies to gradually adjust their production and during that period of time, they typically end up with higher inventory which is what we saw in the industry as well and that they ended up with a little higher inventory and the discounting also has gone up. We are in a transition period in which the supply and demand is adjusting to new normal in the passenger vehicle industry. The other thing I wanted to talk about specifically is tractors because the market is betting big on the sectors which are going to see a revival thanks to a normal monsoon and of course the rural economy making a comeback. So, specifically for the farm division of Motown, what is your expectation? Kumar Rakesh: At the start of the calendar year, we were seeing some weak numbers coming through in the tractors, but over the last few months we have started seeing improvement in the tractor numbers as well. We are getting into the new harvesting season, August, September, October typically is a stronger month for tractor demand and these months would be critical to gauge how strong the recovery has been and we would be looking very closely at the numbers. But it would be fair to expect that we have made single digits sort of a growth for this financial year should be doable for the tractor segment and some initial signs or indications of that should start reflecting in the coming months as well.In the second half, the base also starts becoming a little more favourable and that should also help the tractor sales growth numbers. What is the outlook on the Ola Electric IPO given the kind of investor interest that we have seen and the response which has been phenomenal. What does it mean for the upcoming IPOs within the space and of course for the existing players?Kumar Rakesh: We think that the electrification in the two-wheeler industry is a structural trend and we have seen the indications of that whenever the incentives have been removed and the immediate following month while penetration fell, but with every passing month the penetration has been improving. Even in September we saw that the penetration of electric two-wheelers has moved up. So, electrification definitely is a structural trend. There would, of course, be some level of consolidation which we have already seen in the industry and now some of the key players have come out as winners in that consolidation. The market share within those is something which we will have to watch out closely because all said and done, the industry is only about 6-7% of the total two-wheeler industry. So, we have not reached the mass level, have not reached across-the-country driven electrification trend as yet and as that starts happening, there are far more traditional buyers for whom the resale value, the after-sales service, word of mouth, the traditional parameters for buying any vehicle matters far more and the companies which fare better in those parameters will possibly continue to maintain the share which we are seeing currently or possibly increase as well. So, while a lot of dynamics has already played out in the electric two-wheeler industry, a lot is yet to play out in the coming years as this penetration continues to move up. It would be fair to expect that the market share can continue to churn between the players. But who will be the eventual winner? Will it go towards the EV players eventually where a 5-7% change happens every year and then in 10 years there will be a stark difference or do you think the domination in ICE will continue? I have two examples here. What has happened to China and what is currently happening in other Asian countries? In China, EV is a success, in other Asian countries EV is not such a success.Kumar Rakesh: There is a difference when you are talking about the rest of the market where there is passenger vehicle electrification. In India, we are talking about the two-wheelers electrification in this conversation and the two-wheelers do not have so much of dependence on the charging infrastructure or the price difference between an ICE and EVs are not as high as it is in passenger vehicles and that is why the structural trend towards electrification for the two-wheeler should continue. There is an argument and debate about what that means by 2030. We think that the electrification of two-wheelers would still reach only about 30%, which could be conservative by some standards, but that trend will definitely be structural. We have already seen a large part of the consolidation of the industry. Some of the winners have already been established and what is not established as yet in our view is the market share between those players who would be having a better or lower market share than today, will be determined a lot by the kind of products which they are selling, the kind of service they are offering and the word of mouth which gets spread. These things will establish the resale value of the products. Those things are yet to be established in the industry. How important is the importance of the rural economy for two-wheelers because it was thought that two-wheelers and the rural economy are connected to each other, but this year the rural economy has not recovered but two-wheeler sales have recovered. Two-wheeler sales have started recovering even pre-monsoon. The old theory which we have is that rural India has to do well for two-wheelers to do well and for rural India to do well monsoon has to be great.Kumar Rakesh: That is a very good observation actually. The demand recovery started off from last festival season itself. We have seen almost a year of stronger two-wheeler demand while the rest of the parameters for the rural economy may not be indicating similar strong buoyancy and we think the answer lies in the financing. Over the last one, one-and-a-half years, two-wheeler financing has dramatically increased and that has increased the addressable market for two-wheelers and in any of the segments wherever the financing has gone up, we have seen strong demand. Smartphones are one of the examples for that. We think that is one of the drivers which has driven the strong growth. I am not saying that it is a driver which cannot sustain, but that is definitely something which has dramatically aided to the volume growth which we are seeing in the industry and the decoupling which you are talking about.