Advocating a stock-picking approach, the ace investor pointed out how the "hunky dory" days of the 2017 bull market are now over.
The market correcting by around 10 percent from its all-time highs may not have been received well by most investors, but experts reckon the correction was a ‘much-needed’ one that brought with it some hope and opportunities to make money.
"Volatility, which was missing in the market, is back for sure. There will be a lot of it (volatility) this year as well as next year too…one has to be brave, selective and do their homework properly and make money on a stock specific basis," market veteran Madhu Kela told CNBC-TV18 in an interview.
Stressing on the need to adopt a stock-picking approach, the ace investor pointed out how the "hunky dory" days of the 2017 bull market, when one could buy just about any stock, are now over. "We are back to doing bottom-up hard work where earnings visibility is there," he told the TV news channel.
The bottom line is that such kind of volatility will give one a good entry point to the market, and investors must grab these opportunities with both hands, he added.
Speaking about the risk arising from politics, Kela pointed out that no one in the past three years has been able to call the politics right. But these are still early days, he said, hinting that there is a whole year left before the 2019 general elections get underway.
Meanwhile, the expert also threw some light on mutual fund inflows into the market. "Between 2009 and 2014, you got negative inflows into equity. So, there was accumulated demand into equities, which came into the market once it started performing well," he said.
However, Kela added that inflow of around Rs 20,000 crore, as seen in FY18, was an aberration, and that going forward, the market will see inflow of around Rs 8,000-10,000 crore from mutual funds on a sustained basis.
In addition to this, Kela also spoke about several themes during the course of the interaction. Detailed below are the sectors he is most bullish on.
From a medium-term perspective, the sector has a lot of value, Kela said, adding that one should stick to buying 3-4 PSU bank stocks.
The ace investor pointed out that the government has already awarded many contracts, the effect of which will be seen over the next 2-3 years. He also said that the results of these companies are likely to be good.
Liquor companiesKela said that he continues to like stocks of liquor companies, despite their prices having increased significantly over the last couple of years. The reason for this, he said, was that the earnings of these companies are still seen increasing at a healthy rate.