Rajesh Kothari, Managing Director, Alfaccurate Advisors said they would stick with their '3M' investment approach – market size, market share and margin of safety. Going forward, margin of safety is going to be very important because the market size would increase post demonetisation, said Kothari.
He is confident that the long-term India story still remains intact although in the short-term there could be some impact due to demonetisation, adding that over the longer term India would be a more structurally stronger story.
However, with the demonetisation coming in, the portfolios would have to be realigned to the reality on the ground, so that we adjust to some damages that would be permanent and some that would be temporary.
Stock/sector specific, he said one needs to differentiate between companies where earnings growth is less impacted while price to book/earnings multiples are not at a significant premium compared to last 10 years average. For example, HDFC Bank, Yes Bank are the banks were asset quality may not get impacted although loan book may get impacted. So the downside for them is limited and upside if one holds for over two years, will be in line with earnings growth.
For entire interview, watch accompanying video.