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Opinions5 Mins Read

Invest In India Easily: Introducing Marcellus Investment Managers


At the beginning of the year, much was said about how important emerging markets were going to be and how one should invest in them. The ongoing pandemic has of course drained some of that optimism, but there are still pockets of hope that remain. India is one of those countries which makes for a good investment haven even amidst this crisis.

In the coming years, India’s influence in the Asia-Pacific region is only set to increase. The center of global maritime trade is expected to move from the Pacific to the Indian Ocean Region, and India; along with China, is set to become the largest manufacturing hubs of the world by 2030.

Rising affluence is also another of the reasons why this country tops the list of emerging markets to watch. Private consumption is expected to grow four times by 2025 (maybe a bit tempered due to the pandemic). With the implementation of reforms like GST, India has also jumped 79 positions from 142nd (2014) to 63rd (2019) in ‘World Bank’s Ease of Doing Business Ranking 2020’.

With the pandemic, the country has definitely hit some roadblocks in the form of a ratings downgrade. But as its economic fundamentals stay strong, India is expected to rebound from the current crisis in a stronger manner.

To help you invest in India, we have onboard a new fund on our platform – Marcellus. Incorporated in 2018, Marcellus Investment Managers is a SEBI-approved fund house that aims to influence efficient capital allocation in the Indian economy. Following is a tete-a-tete with Saurabh Mukherjea, CIO Marcellus, and his thoughts on why India makes for a good investment opportunity in today’s times.


1. Before 2020, emerging markets were geared up to be a big success story. How do you think the pandemic has affected this sector and India in particular?

Saurabh: In terms of lives lost, Emerging Markets have come out of Covid looking better than developed markets. If you look at the data (see https://www.worldometers.info/coronavirus/), amongst the top 10 countries in terms of Covid fatalities, only 3 are Emerging Markets (Brazil, Mexico and Iran) and, remarkably, only one is in Asian country. Interestingly, not a single South East Asian or South Asian country is in the Covid top 10. Given that Emerging Markets are poorer & more populous than developed markets, the fact that they have dealt with the public health impact of the pandemic better than developed markets is something which will resonate with a lot of global investors. In particular, the average age of a country’s demographic will become a metric that investors will look at more closely than ever before.

India scores relatively favourably on all of these fronts. Its Covid death rate has been the lowest amongst large countries. Secondly, the average age of its population is 28 which has a number of positive implications not least the higher propensity of a younger country towards consumption. And thirdly, against all odds and against the expectations of almost everybody, the Indian economy is recovering quickly. You can see this evidenced now in a battery of indicators from indirect tax collections to electricity demand to fuel demand to statements emanating from large companies like Nestle, ITC, Maruti and HDFC Bank.

2. Central banks have played a huge role in boosting stimulus and keeping investor sentiment high in the past few months. How do you think the RBI has fared in this regard, and what measures can it take to further boost the Indian economy?

Saurabh: Shakti Das and the RBI have played out of their skins over the past three months. They figured out quickly that given the barrage of liquidity being unleashed by the Western central banks, India could afford to aggressively cut rates and ease liquidity without fear of the INR collapsing. So the RBI has basically delivered a rate cut of 200bps in three months to the Indian economy alongside flushing the financial system full with liquidity. We can see the benefits of that now coming through as: a) credible lenders report that credit disbursals in June are back to Jan levels; and b) companies – large and small – are getting to borrow at rates significantly lower than those prevalent before Covid.

In parallel, the RBI and the Government’s efforts to resuscitate India’s beleaguered NBFCs is bearing fruit with the smaller NBFCs now being able to access credit from the schemes orchestrated by the Government.

Even more creditably, the Government did NOT yield to the repeated requests from many corners of the country for aggressive fiscal easing. If everybody is locked down, doling out fiscal stimuli is a recipe for generating inflation. Hats off to the Indian authorities for figuring that out.

3. Many global investors, particularly the global Indian community, have portfolios in India through mutual funds and last year many funds underperformed the broad index. How does Marcellus compare with its peer group?

Saurabh: The broad indices are not a particularly clever way of investing in India partly due to imperfections in their construction (see our Nov 2019 blog on this subject). There are several reasons for this not least the structural changes taking place in the Indian economy which are concentrating the entire profits of the country into the hands of 20-30 companies who have built powerful monopolies using technology and regulation – see our May 2019 blog on this subject – and the superb article which The Economist published around our research.

Those who are investing in India via index funds and via mutual funds are basically allocating the majority of their capital to companies who are not being able to grow their earnings. In contrast, Marcellus’ entire portfolio consists of stocks whose books are clean, whose products are essential for day to day life in India, and who have monopolistic barriers to entry. As a result, our portfolio outperforms the Nifty by around 15% per annum.

4. Moody’s, S&P, and Fitch recently downgraded India’s sovereign rating. We have also had news of lower FII flowing into the country. BNP Paribas recently announced that it would shut down its wealth management arm in India. Do you see a cause for concern for investors looking to invest in the country?

Saurabh: Credit rating agencies’ rating actions are very powerful contra indicators. Eg. in the autumn of 2013, the rating agencies downgraded India and then the Indian market roared for 2 years. Another eg. in November 2017, the rating agencies’ upgraded India. A month later the bear market started. At one level it is not the rating agencies’ fault that their ratings are contra indicators – they are obliged to take a rearview mirror view of the Indian economy. That, for better or for worse, is not the way successful equity investing is done.

5. Post the unlockdown, India, has seen a huge spike in numbers. How do you see the economic impact of a second wave of Covid-19 and any ensuing lockdowns affecting the markets?

Saurabh: It is relatively clear that neither in India nor in the US will governments willingly allow another lockdown. What we can see is that across the world the death rate from Covid is coming down as treatment protocols improve. As a result, unless the hospitals are full to overflowing, no government is putting the economy back into lockdown. Since the number of hospital beds is gradually increasing, the regions which are being subjected to new lockdowns are fewer and fewer. Obviously, once the vaccine (or vaccines) comes through these lockdowns should become a thing of the past.

6. Do you see any changes in the consumption behaviour of an investor interested in India due to this pandemic? Does it affect the decisions you are taking in your portfolio?

Saurabh: The main thing we are seeing is that people are reluctant to step into restaurants and planes. Obviously, cinema halls are shut. Consumer spend which was going into these sectors is going to cloud kitchens, OTT content and 2Ws and passenger vehicles. Such shifts are part and parcel of economic transitions. They have happened before and they will happen again.

About Saurabh Mukherjea

Saurabh Mukherjea - MarcellusSaurabh Mukherjea is the Founder and Chief Investment Officer of Marcellus Investment Managers.He is the former CEO of Ambit Capital and played a key role in Ambit’s rise as a broker and a wealth manager. When Saurabh left Ambit in June 2018, assets under advisory were $800mn.

Saurabh was educated at the London School of Economics where he earned a BSc in Economics (with First Class Honours) and MSc in Economics (with distinction in Macro & Microeconomics).

In London, Saurabh was the co-founder of Clear Capital and in 2007 he was rated by the Extel Survey as one of the top small-cap analysts in the UK. In India, Saurabh was rated as the leading equity strategist in 2015, 2016 and 2017 by the Asiamoney polls. Saurabh is a CFA charter holder and a SEBI registered investment advisor. In 2017, upon SEBI’s invitation, he joined SEBI’s Asset Management Advisory Committee.In 2019, Saurabh was part of the Expert Committee constituted by SEBI to update and upgrade the PMS regulations.

Saurabh has also written three bestselling books: Gurus of Chaos (2014), The Unusual Billionaires (2016) and “Coffee Can Investing: The low risk route to stupendous wealth” (2018).


The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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