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DAILY VOICE | Avoid cryptocurrency as of now for portfolio diversification: Jay Thakkar of Marwadi Shares

The markets have already started to correct or consolidate after reaching 15431 levels, and it may continue to do so for few more weeks or months, but the overall larger trend is absolutely bullish, says Thakkar.

February 23, 2021 / 07:38 AM IST

Jay Thakkar, who has nearly 10 years of experience in capital markets under his belt, is of the view that Cryptocurrencies are not widely accepted globally like any other currencies, so till there is no full-fledged acceptance of it like that of Dollar or INR or EURO or GBP, I don't think including it in the portfolio for diversification makes sense, he said in an interview with Moneycontrol’s Kshitij Anand.

Thakkar, who is a VP and Head of Equity Research at Marwadi Shares and Finance, said that some corrections are always healthy for the markets and I think the dip should be definitely used as a buying opportunity in the medium to long term. Edited excerpts:

Q) In 2021, big theme that has emerged is Bitcoins. Should investors seriously consider crypto as an additional asset class? How should one plan a portfolio for a post-COVID environment?

A) Cryptocurrencies are not widely accepted globally like any other currencies, so till there is no full-fledged acceptance of it like that of Dollar or INR or EURO or GBP, I don't think including it in the portfolio for diversification makes sense.

Q) The market is going through some consolidation, but do you think the lomg-term story is still intact and it is still a good buy on the dips market?

Close

A) Definitely, the bigger story is still intact. In fact, we had a short-term target of 15,500 on the Nifty and it has made a high of 15,431 almost reaching our target price.

Some corrections are always healthy for the markets and I think the dip should be definitely used as a buying opportunity for the medium to long term.

One has to be sector and stocks specific as at these levels, because it may not be an overall uptrend wherein all stocks participate

Q) It is well-known fact that the market discounts everything in advance and this it might have discounted a lot. Do you think with growth catching up – the market could not take a breather and let numbers do the talking before resuming its uptrend journey?

A) Yes, the market generally discounts everything well in advance and will continue to do so. The corporate earnings numbers so far have been quite positive and it’s good to see that things are coming back on track and many companies have in fact posted higher earnings than pre-covid levels which clearly shows that the growth is picking up.

The markets have already started to correct or consolidate after reaching 15431 levels, and it may continue to do so for a few more weeks or months, but the overall larger trend is absolutely bullish

Q) There is a lot of buzz in the financial services space on account of privatisation or merger of NBFCs. How should one play the financial space post Budget 2021?

A) There are always many rumors in the market but the one which delivers higher and consistent earnings are constantly rewarded.

The disinvestment candidates as announced by the government will perform well. The peers of these disinvestment candidates will also do well on account of their re-rating.

The PSU banking sector has already seen lots of consolidation and merger in the past few years and still, I think due to pandemic they are not able to completely merge their operations, so again privatisation of them would not attract many bidders on account of non-clarity on NPAs front as well as operational front and the same goes with NBFCs

Q) 7 consecutive month of outflows from the equity MF scheme tell a story that investors would like to take things in their own hands especially the ones who can take risks while the risk averse ones continue to follow the SIP route. What are your views?

A) The number of market participants in the market has increased and the products and awareness in the market have also increased due to which one can see active participation in MF space as well unlike passive participation earlier.

Because of advanced technology, AI going forward such activity in a mutual fund as well as direct equity will increase due to quick information and monitoring systems, services, and advisory.

Q) We have seen lot of digitization taking place in every sector amid the outbreak of COVID last year. Can Internet-based companies, insurers turn out to be the next wealth creators of this decade? What are your views – if not, which sectors are you eyeing?

A) Yes, what Corporate India or Global Companies had thought about expansion in the digital space in the next 5-7 years has started to happen now at a good pace.

The market has already discounted it somewhat, hence NIFTY IT is one of the top performers in FY 20-21. The outlook for Dollar Index for the long term is negative i.e. it will remain in a bear market for next 2-3 years due to which INR is likely to appreciate which will affect the margins of these IT companies.

So, if the topline sees significant growth then the bottom line will be taken care of despite margins getting impacted else that can be a concern.

Q) The year 2020 saw many good ticket IPOs and the story for the primary market still remains strong in 2021. Can we call it a frenzy amid the abundant liquidity in the system? It looks like whatever you throw at D-Street everything will get absorbed. What is the kind of money your see getting raised in 2021?

A) Only 15 IPOs were issued during CY2020 while on an average 23 IPOs per year were issued in the last 10 years but the returns generated were 43.82% while only 14.75% return was generated in CY2010 when there was the highest number of IPOs were issued i.e 64.

The returns generated during this time have attracted more of the investor’s money. Hence, we can expect more IPOs to come into the market going ahead.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Feb 23, 2021 07:38 am

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