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Portfolio Talk

Published on: Sept. 6, 2020, 11:58 p.m.
'India favourite over China'
  • Ganeshprasad Pradhan

By Lancelot Joseph. Executive Editor, Business India

Q The Sensex is around the 38000 mark, where do you see it going?

A The world is looking up to India in many ways. Post pandemic, focus will shift from China to India, FDI money is flowing in a big way, the government is taking steps to boost the economy, the foundation seems set for the next leg. In the next decade, we can very well see Sensex cross the one lakh mark. In the stock market, patience is the key to create wealth. The approach must always be long term. For the first time in a decade, Indian investors are witnessing a full-blown bear market. While the reasons for the stock market crashes vary every time, the basic tenets of surviving these events remain the same. One should be able to safely manoeuvre the finances through these challenging times. It is natural to get cold feet in a full-blown bear market, while deploying money, for new investors. But when the market seems to be on a path of recovery, do not hesitate to get back onto the saddle. It is only when the market recovers fully that investors realise that they missed the bus. At some point you should start making a staggered entry. That is ideal.
 
Q What is your investment philosophy?

A Rome wasn’t built in a day. Every creation is a process.... and so is wealth creation. Investing is about minimising risk to generate wealth over the long term, not generating short-term profits. So save, save enough and start investing early to meet your financial goals. Asset allocation plays a very important role in framing your portfolio. The thumb rule says, 100 minus your age should be the equity allocation, and remaining should be in debt, with 5-10 per cent in gold.

Equity investment, whether in shares or mutual funds, gives great returns in long-term with lower taxation. What one needs to comprehend is that unanticipated negative shocks are part and parcel of equity investing. In fact, because of this risk there is a premium on equity investing, that’s why equities earn more than deposits. The most important part is to educate yourself well about it or to consult your financial advisor before investing. When one earns and spends regularly, investing also must happen regularly. I personally feel, SIP is a great tool in Mutual Funds to systematically meet the long term goals.
 

  • Capital markets have seen many corrections in the past, where indices have corrected more than 50 per cent. However, every time market has recovered it made a new high

Q What are the sectors/scrips to watch for in the current market?

A As I mentioned earlier, India has a huge scope as people are moving their production out of China. India ranks 14 in export and 8 in import of chemicals (excluding pharmaceutical products) globally, this number is expected to increase as countries will prefer outsourcing from India. Currently pharma sector all over the world is seeing an uptrend. India is the largest producer of generic drugs globally. India enjoys an important position in the global pharma sector.  As for any economy, the engine always is Banking and Financial sector. It will play a vital role in the revival of economy. Other sectors that currently look attractive for long term investment are: IT & Technology, Infrastructure, Consumer non-durables. For a layman, good multi-cap funds are a good option. This gives one an opportunity to have a basket of potential companies under one roof.
 
Q What is your outlook post the first half results?

A Capital markets have seen many corrections in the past, where indices have corrected more than 50 per cent. However, if we observe, over the long term, every time market has recovered it made a new high. In March 2020, indices fell nearly 40 per cent, however, have posted a smart recovery in the last couple of months. We have seen that companies with strong fundamentals, able management and sound financials have always fared well in the fall and have bounced back and generated wealth in the long term. As observed from the Q1 June 2020 results, good companies have utilised first quarter as an opportunity to improve the operational efficiencies. In the lockdown, the management has looked-in and focused on building sustainable models. In this backdrop, RBI MPC continued with its accommodative stance and reduced policy repo rate by 75 bps to 4.40 per cent, lowest ever repo rate. We believe, once things settle down and get back to normal, many good companies are well placed to gain from the opportunities and navigate this tough and challenging period. We maintain a cautiously optimistic outlook and urge investors to keep a long term perspective. 

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