Allocate about 20% of portfolio to consumer space: Ajay Srivastava

Ajay Srivastava, CEO, Dimensions Consulting, feels the consumption space should form at least one-fifth of an investor’s portfolio. In an interview to CNBC-TV18, he said the space is likely to outperform in the current market environment and smart money could well move from other sectors to high-quality consumption plays.

“Consumption might look overpriced with a high P/E but it is a wonderful space because there is no competition. Even at 5-7 percent growth rate, some 30-40 million new consumers are going to enter this space,” Srivastava explained, adding: “Consumers who are looking to set up their portfolio should be in this space with a minimum allocation of 20 percent in the current market environment.”

He feels market regulator SEBI’s decision to extend the timing for trading equity derivatives till 11:55 pm will expose investors to a lot of risks. “As long as index trading is permitted, there is nothing to worry about. But when it comes to stock futures that’s where the problem starts.”

The market might have witnessed a knee-jerk reaction last week but even in the near future, amid rising oil prices and a depreciation rupee against the dollar, Srivastava sees no big correction for largecap names. “We don’t see any major selling pressure in largecaps. If we look at the largecap universe be it banks, consumer space, or IT companies, and even if there is a correction it would get absorbed,” he stated.

According to him, the problem exists in the small and midcap space. “There are a couple of factors which will impact this space in the short-term. One is the SEBI change in the scheme of mutual funds which will result in a lot of adjustments. As the scheme gets announced, the allocation to smallcap schemes could become a problem for most mutual funds to hold these share.” Going forward, he expects a lot of volatility in the small and midcap space than largecaps.