Expects a pullback for mkts: Puru Saxena

Significant cuts are seen in most of the Asian markets. Puru Saxena, CEO at Puru Saxena Wealth Management said, “We have had a huge rally in the last week or so and it is normal for the market to give back some of its gains”. So a pullback for the markets is expected said Saxena.

He also believes that energy should be huge component of every investor’s portfolio. With regards to India he says, if one can buy good companies which invest in energy, agriculture, fertilizers etc then investors are going to do very well in the next few years.

Here is a verbatim transcript of the interview with Puru Saxena on CNBC TV-18. Also see the accompanying video.

Q: The sentimental rally we saw on account of US elections seems thwarted and focus has shifted back on to fundamentals – do you sense that this bear market rally has been – and now going forward further weakness is on the cards for Asia?

A: My feeling is that we are now bouncing along the bottom for this market. I don’t know whether we are going to see a break below the lows recorded on October 10, and India has rallied from 7,600 odd to almost above 10,000 and so a pullback is now expected. Hong Kong is the same, the low was around 10,600 and now they are trading around 14,000. We have had a huge rally in the last week or so and it is normal for the market to give back some of its gains.

The key thing to note would be to see whether the market breaks below the previous lows or if the market consolidates here and then we see a rally. I am putting my money on the later outcome.

Q: Going forward from other asset classes what it is that you are banking on and particularly from an India point of view given that our inflation is coming lower what is your approach of investment?

A: My firm manages worldwide and we invest in assets depending on opportunities. We have been buying very heavily into the energy complex because the International Energy Agency (IEA) recently reported that the global depletion rate or decline rate for the existing oil fields is not 9% and even investment is going to be 6% so we are going to lose roughly 6% of production capacity every year due to declines in the existing filed. So energy should be huge component of every investor’s portfolio.

We are investing in upstream oil & gas companies; we are buying coal companies and also oil & gas service stocks. All over the world we are also investing in agriculture because there are significant shortages of food and global food stocks are now at lowest levels now for mnay decades.

So we like the resources complex very much, we also like infrastructure. I think investors would be better off investing into those assets which are likely to benefit from energy prices escalating and also the government spending trillions of dollars on infrastructure development.

Q: Do you propose India to be one such story that would benefit from agriculture and consumption led growth?

A: Absolutely. I think investors in India should also focus their portfolios on raw materials because energy is in extremely tight supply and the demand for energy is rising. Same is for food, so if one can buy good companies in India which invest in energy, agriculture, fertilizers etc then investors are going to do very well in the next few years.