'There are attractive opportunities overseas'

Which pockets of the market look attractive after the recent fall? What made mid and small caps fall like a ton of bricks? How should investors now approach SIPs and asset allocation? Rajeev Thakkar, Chief Investment Officer and Director at PPFAS Mutual Fund, took time out for a long breakfast conversation with Aarati Krishnan to offer candid answers to these questions. Here's the interview. It is said that a new bull market is born when the last optimist throws in the towel. So, after the recent correction, do you see such capitulation in the market? No, not yet. I don't see signs of that. Yes, there are pockets in the market where value has started to emerge. But during the uptrend, valuations went to such an extreme that a lot of names are not cheap yet, despite the fall. Take the entire consumption space for instance. Leading stocks like D-Mart, Page Industries, Britannia, Nestle India are nowhere close to their 2008 or 2013 valuations or even close to their average long-term valuations. Are you seeing value in financial stocks which have seen deep cuts? They have corrected but it is a very tricky space to navigate. Take the case of NBFCs. In Indian banks, RBI inspectors were actually sitting in the banks, looking at their loan portfolios, NPAs and deciding what's needed to be done. But NBFCs were more or less the Wild West, with no such monitoring. The entire game was about loan-book growth. The focus was only on the assets side of the balance sheet and no one was worried about the liabilities. Unlike banks, most NBFCs do not have a strong deposit franchise. In this cycle, they relied on market borrowings in the form of CPs, CDs, etc., to fund their growth. I have a simple question. What can an NBFC do that a bank cannot? Banks, with lower cost of funds, can provide home loans, vehicle financing, personal loans, SME loans. So, what was the attraction of the NBFC business model? It was simply that they managed high growth with more liberal credit standards and interest rates. Now when interest rates in the