Anirudh Garg, partner & fund manager at Invasset PMS, thinks the market is not done hitting new highs and says their analysis of the current trend and dynamics point to a 10 percent uptick.
Garg, who has 15 years of market experience and uses AI algorithmic models, is betting big on the tourism sector and sees it as a portfolio must-have. Improved infrastructure, evolving consumer behaviour and a recovering airline industry, signal a significant change the domestic tourism sector, says Garg who is a chartered accountant by training.
In an interview to Moneycontrol, he says the Budget 2024 should at least increase capital spending by 20 percent and remain conservative on reducing fiscal deficit. This would ensure a balanced approach towards fiscal management while stimulating economic growth, he says. Edited excerpts
Do you think technology stocks have priced in all the positive expectations after the December quarter earnings?
Invasset currently maintains a cautious stance on technology, FMCG, pharma and white goods, considering the ongoing "old economy run". While recognising that these sectors have already experienced substantial market activity and price adjustments reflecting negative news, Invasset refrains from deeming them as attractive investments.
Despite potential global growth with US inflation stabilising, Invasset views technology stocks as not sufficiently cheap or growth-leading to warrant inclusion in its portfolio. Instead, the firm prioritises interest-rate sensitive sectors and capex beneficiaries, aligning with market dynamics and presenting what they believe are superior opportunities for growth and value.
Also read: RBI draft norms: Fintech SROs to be free from influence, development oriented
Do you expect a 1,000-1,500 points correction after the Budget?
Our strategy involves strategic and careful investment decisions, considering where and how much to invest while staying vigilant. Market fluctuations such as a potential 1,000 to 1,500 point correction post-budget, are not predicted, as we avoid short-term market timing. Instead, we categorise market phases using our multi-factor algorithmic models. Contrary to a correction, we are contemplating a potential 10 percent uptick in the markets based on our analysis of current market dynamics and trends.
What do you expect from the Interim Budget on February 1, especially ahead of the general elections?
We believe that the budget should emphasise significantly on capital expenditure. Investing in capital projects can be likened to buying a shop for future income generation rather than spending on immediate, ephemeral needs.
We advocate for at least a 20 percent increase in capital spending, coupled with a conservative approach to fiscal deficit reduction not exceeding a 25 basis points decrease if any. This would ensure a balanced approach towards fiscal management while stimulating economic growth.
Additionally, we anticipate that the sectors that led in the previous year, particularly those related to capital expenditure, will continue to perform well.
Also read: Expect PM Modi to be re-elected, good for India and the world, says Martin Sorrell
Do you expect the government to increase offer-for-sale (OFS) issues in the next financial year FY25?
In FY24, the government's cautious approach to disinvestment led to raising a modest Rs 8,000 crore, augmented to around Rs 11,000 crore with the inclusion of Hindustan Aeronautics' OFS. This figure fell short of the ambitious target of Rs 51,000 crore. The focus primarily on public sector undertakings (PSUs) suggests an emphasis on meeting previous unmet targets.
For FY25, we anticipate that the government's disinvestment efforts could reach between Rs 30,000 crore and Rs 50,000 crore. This projection is based on the government's continued focus on PSUs.
Also read: IPO preparations underway, says Swiggy's Sriharsha Majety
Do you think domestic tourism space should be part of the portfolio?
Invasset identifies the domestic travel and tourism sector as a highly promising investment avenue. Notably, infrastructure enhancements at popular destinations like Goa, driven by government initiatives and private investments, signal significant changes. Post-Covid, the hotel accommodation segment has shown substantial growth, fuelled by sustained domestic tourism, increased preference for leisure travel, rising income levels and a demand for premium offerings.
The airline sector, overcoming past challenges, displays positive indicators such as decreased competition, lower fuel costs, heightened air freight demand and flight occupancy rates exceeding 90 percent. Tours and travel operators also benefit from sectoral growth.
With improved infrastructure, evolving consumer behaviour, and a recovering airline industry, Invasset is bullish on the domestic tourism sector, deeming it a compelling opportunity for portfolio inclusion.
Do you expect the Red Sea turmoil to worsen inflation? Will it delay the Fed rate cut further?
The tensions in the Red Sea bear undeniable significance, impacting vital global trade routes. Regarding the Federal Reserve's interest rate decisions, it's crucial to recognise their broader economic policy context and second-guessing may be unwise. Despite divergent opinions, the market adage of not fighting the Fed prevails.
Considering inflation as a challenge of the past, the current outlook is bullish, particularly for interest-rate sensitive sectors like real estate and metals. Invasset believes these sectors are well-positioned to thrive in the current economic environment, irrespective of short-term geopolitical tensions or Fed rate adjustments.
Your fund - Growth Pro Max Fund - delivered a 97 percent return in the past year. What is your strategy behind the fund?
Invasset's Growth Pro Max Fund, while delivering a remarkable 97 percent return over the past year (2023), emphasises the importance of not considering past returns indicative of future performance. The fund's success is attributed to the "Invasset AAID", a sophisticated code distilled from 30 years of experience, ensuring unbiased investment decisions across sectors, stocks, market caps, and investment styles.
The investment philosophy rests on four pillars. Value investing involves buying stocks below intrinsic value and avoiding potential value traps in bullish markets. Growth investing identifies new market leaders in bull runs using the "Relative Change Rewarding Criteria" for top 100 companies. In overvalued markets, a shift to quality investing focuses on companies with strong fundamentals, akin to Warren Buffett's strategy.
The investment cycle spans three to four years, aligning with a long-term perspective to avoid excessive churning and provide stability for investors. Investors are advised to consult financial planners before decisions, emphasising the fund's commitment to transparency, long-term gains and a unique investment approach grounded in experience and advanced algorithms.
Which are the sectors that you love the most for the fund's performance and why?
Recognising the current "old economy run" phase, influenced by interest rate-sensitive sectors and capital expenditure (capex) beneficiaries, Invasset analyses global events affecting growth and inflation. Contrary to global challenges, India's conducive environment for capex-driven growth stood out, evident in GST implementation, rising collections, and substantial government allocations to capex. Sectors like defence, railways, infrastructure, power, and PSU banks became focal points for investment.
Disclaimer: The views and investment tips expressed by investment 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.
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