Ajay Srivastava, chief executive officer, Dimensions Consulting says that investors should look at keeping their investment horizon short-termed. He also recommends churning of portfolio every 15-20 days.
At a time when the country’s macro data and sentiment is weak, one should look at individuals stocks for good returns, believes Ajay Srivastava, chief executive officer, Dimensions Consulting. "This is the time to focus on smaller stories that have given positive returns in the last three to six months," he adds.
In an interview to CNBC-TV18, he advises investors to keep a short-term investment horizon and churn portfolio in every 15-20 days.
"One might have pain for some companies for sometime but eventually the stronger stocks will prevail. So, in portfolio buildup the key point is to encash your profit. Every 15-20 days see your portfolio, churn it around, book the profit. It doesn’t matter whether the stock price goes up or down later on, don't worry about that but block in the profits," he adds.
Below is the edited transcript of Srivastava's interview to CNBC-TV18.
A: Enough has been said about the negative. The key is for all of us is to start focusing on the little side story building up in the system where we can make our money. Our macro economy is doomed, the rupee at 62 per dollar is a disaster, but the interesting part is that there are stories building up in the system and one has to focus on them. If one starts to focus on macro economy, he'd better stay out of the equity markets altogether.
Assuming that one wants to be in the market, the key is to focus on smaller stories. There have been success stories in last three-six months, with positive returns in the equity markets and those sectors, companies, certain events are leading up to good quality returns even in this depressed market scenario.
So, despite the bad macro economy, there are success stories, rerating taking place and company specific items which are coming up. Focus on them because that is the only way to make a return unless you are a short-term or you go short majorly in the market which is very good. However, most of us don't do that. So, we recommending focusing on those 30-40 counters and start making money because macro economy is a dismal zone in any case.
Q: Do you fear that in the next few weeks and months you will probably get to buy these businesses at much lower valuations if some of the global investors who hold these companies for whatever compulsion have to sellout a portion of their holdings in India?
A: We are also keeping our investment horizon extremely short-term. So, yes we fear at one level. However, I don't think the market will be washed out even if the big sale happens.
One might have pain for some companies for sometime but eventually the stronger stocks will prevail. So, in portfolio buildup the key point is to encash your profit. Every 15-20 days see your portfolio, churn it around, book the profit.
It doesn’t matter whether the stock price goes up or down later on, don't worry about that but block in the profits. We are not saying invest for a year’s horizon, we are saying there are pockets. For example, the ADAG stocks are rerating. Reliance Infrastructure looks very attractive, it has been very attractive for the last two-three weeks to rig up. Maybe Reliance Capital too will move up and so on.
The Vijay Mallya stocks too have done a wonderful job of returns. So, these are the stocks one should be in. It is getting positive returns and should there be a major sellout, one isn’t in a bad zone with these kind of stocks.
A: It will put a lot more pressure on the equities. Looking at the last three years inflation differential shows that we are simply catching up and it is going to get lot worse not because of reasons that everybody is saying so, but because we are not seeing the government focusing on making India export comparative.
Our cost structure is going out of control, inflation will bounce back to possibly even double digits in consumer very soon because every pass-through of 61-62 per dollar is going to add huge amounts to inflation.
Hence, with this inflation rate, with the cost structures, with the government where it is today, there is no way we are becoming export comparative. And we invest in companies, run these companies and we know that government has done nothing to make us competitive. So, unless we export and earn income, there is no way we can meet this gap.
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