In an interview with ETMarkets, Thakker, said: “Investors should ideally look at these companies only when they start generating positive cashflows on a sustained basis,” Edited excerpts:
Nifty reclaimed 18000 but is facing some resistance around record highs. Is the worst factored in?
Against the backdrop of global uncertainties including the US Fed rate tightening and Europe grappling on multiple macro fronts, India has been a stark outperformer.
My take is that we have the necessary tailwinds domestically including expectations of inflation tapering off, modest rate hikes by the RBI, and strong corporate earnings to drive markets going forward.
With encouraging CPI print in the US, which looks sustainable on the back of softening commodities, we feel that foreign money will find its way to India.
Also, the falling G-Sec bond yield in the US is giving a lot of comfort to the bulls to take this market higher.
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The recent rally seen in the Indian market stands out when we compare it to EMs. Will India be able to hold on to the outperformance?
I feel that we are going to witness a fresh round of allocations for the new calendar year by foreign investors.
With clean balance sheets and strong cash flow, Indian companies are looking for a sweet spot to garner a large chunk of the money.
As Indian markets are on the verge of creating history, where do you see the next set of leaders emerging from?
There are few pockets in the Indian market, which are looking good from a medium to a long-term perspective. The corporate earnings, especially on the banking side, have surprised us positively.
Strong credit growth, lower provisioning post-COVID and improving asset quality bode well for the next leg of growth of the sector.
Investors can also keep a tab on automobiles, capital goods, infrastructure, and select consumption and cement stocks. On the flip side, the chemical sector has largely disappointed, given the margin pressure and gloomy global scenario.
We feel that it would take some heavy lifting by the guys in this sector to justify their valuations going forward.
Recently, PSU as well as Rail stocks have picked up momentum. What is driving the rally in these 2 sectors?
One needs to understand that PSUs have strong and monopolistic business propositions. Also, with general elections slated in 2024, the government is more focused than ever to propel the infrastructure growth engine.
If these companies can continue to deliver growth, profits, and cash flows, they have the potential to outperform in the future.
Any sector(s) which you think investors can protect their holding as well move towards record highs because it might have already run up?
Although commodities have cooled off from their highs, we feel that the top is in place, especially for base metals.
Any bounce in commodities on the back of softness in the dollar index should be used as an opportunity to exit. We believe that in the long term, commodities do not make an ideal investment candidate.
Also, we are cautious about new-age tech and platform-based companies, owing to a lack of positive cashflows, weak balance sheets, and steep valuations.
Investors should ideally look at these companies only when they start generating positive cash flows on a sustained basis.
Should one consider rejigging their portfolio as markets create history?
Again, it depends on the time an investor has in hand to stay in the markets. If someone is willing to stay for long, there are interesting opportunities in the bottom-up approach.
Now that bulls have again taken control of D-St do you see more IPOs making their comeback to D-St? We have already seen a few in Oct-Nov. Any particular IPO(s) which you are looking forward to?
The IPO market is largely driven by market sentiment. We expect the demand for new issuance to remain strong on the back of strong SIP inflows, DII investments, and no shareholding reduction by promoters.
Again, coming to specific IPOs, I believe that it is more a function of how much money is left on the table for investors.
How do you see export-linked sectors faring in the near future?
We believe that in the export-linked sectors, IT sector should shun its underperformance going forward. With attrition rates likely peaking off and encouraging TCVs, it looks prudent to take a calibrated exposure to the IT sector.
Also, barring near-term hiccups, we believe that digitalisation and increasing
on technology are irreversible trends that will play out in the long term.
Your biggest upgrades or downgrades post-Q2 results? (can avoid) or Your take on September quarter earnings and how will the December quarter pan out?
The second quarter results are mostly in line with our expectations. With encouraging management comments for the December quarter, we believe that the overall picture should improve going forward.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)