Changing Trends: There is a decadal shift in PSU stocks and such moves tend to last long: Atul Suri
Atul Suri, CEO, Marathon Trends, says “the whole PSU move is a decadal shift. There is a decadal shift in sectors and themes. Engineering, infra, construction never moved post 2008. So, when they move, they tend to be rather sticky. We have learnt this from the 2003-2008 period. A similar set of sectors were moving, similar themes were playing out and that was a phenomenal bull market and it kept surprising us. Ultimately, it lasted five years.”
Who would have thought that PSUs would be where they are? It is at a record high for the PSU banking index. I know the majority of the indices are close to their record highs but are you surprised by this move?
Yes, the surprise is the follow-up.
Last year was a great year. In fact, the PSU banks were the best performing sector and this was after a decade of underperformance. PSU banks used to be the most hated, shorted space in India.
The trade of the decade was long HDFC Bank, short SBI and when it turned, what is surprising me is that after a phenomenal ‘22, they are also having a very good ‘23 and that really shows that when decadal trends change, it does not end in a year. It actually gets elongated.
In fact, the whole PSU basket if you see is not just banks, there are defence stocks, a lot of these infra-type plays as well. Like everyone, people who have been in the market for 20-30 years have sworn we will never buy PSUs because many times in their life they have tried and burnt their fingers.
They have given back 40-50% drawdowns and the market has ways of surprising. So, going with the trend, being humble, accepting what the market is telling you, is what I have learned. So, the trend is your friend until the end when it bends.
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