'Mid- and Small-Caps Lot More Attractive Than 18 Months Ago'
parameters over the
last 2-3 months are
back in India's favour, said Taher Badshah, cio-equities, Invesco Mutual Fund.In an interview to ET Now, he, however, cautions that it is not the environment where we can significantly buy things at a premium.Edited excerpts :
Large-cap stocks are holding on, but do you think it is a matter of time We will also get hit with what is happening in the global markets, whether oil or commodities-everything is down ? We have been holding a slightly different view that some of the troubles that we are seeing in the overseas market are actually in a way positive for India and to that extent, Ll am not entirely surprised at the kind of decoupling we have seen of the Indian markets versus the overseas ones at least over the last one month or SO .
Obviously as we know, with oil and some other metal commodity prices also coming off, at one level this is kind of positive for India from a long term perspective .
Increasingly, there is a case where we need to see whether this tightening by the central bank is probably likely to continue.| do not really think so.That is
going to probably be the case, going forward.Markets are probably looking forward to a turn from the point of view of interest rates as well in India .
We are also coming from the situation where since the start of this calendar year, the US was the only market which was actually rising and it was positive for most part of the year.Most of the other emerging markets along with their currencies had actually come off and I think it is a reversal of that trade as of now.US markets did become a little expensive and were looking a little heavy and | think that is the reason Why we have seen this correction .
Meanwhile, many of the emerging markets had already corrected and so had their currencies.Maybe there is a possibility of developed market to emerging market trades developing once again for the near future .
What sort of a balance would you Keep in your portfolio currently ? Wetry to buy into ideas where we feel that the valuations are reasonable and comfortable.It is not an environment immediately right now where we can significantly buy things at a premium or overpay .
That is something which is a complete no-no.So we are trying to only find pockets which are reasonable from the point of view of at least the medium to long term perspective of those businesses without worrying very much about the short term .
Of course, many of the macro parameters over the last 2-3 months have turned once again back in India's favour.So that gives a little more leeway in order to be a little more aggressive, but by and large still we know that there are certain roadblocks, we Know that there are certain things which have to clear out .
It is still not time to be overly aggressive but yes, we are largely constructive on sectors where we believe that the risk reward is reasonable.And incrementally like for example, even in the mid-and small-cap spaces, we think now it is a better time compared to what it was one year ago or 18 months ago.They are not cheap, but they are still a lot more attractive.I think they are best bought during times when they are down and they are Kind of ignored by the market.If you have a 2-, 3-year horizon, they pay off pretty well .
What are you ready to buy from the consumption basket ? It is quite broad based, but staples is still not very easy from the perspective of valuations.It is not something where we can g0 aggressive.We have limited ourselves to a couple of names again where we believe growth versus valuation or the risk versus reward balances are reasonably okay.Otherwise, in consumer discretionary, there are certain pockets but this is a wide basket and includes everything from retailers to building materials to automobiles to various other things.To that extent, it is a very diverse basket.So, | can not really pinpoint and therefore in the consumer discretionary space, it is more bottom Ups which works well rather than a broad sector approach .