Investors are looking at pharma as a value buy: Ambit

A: Depends on the result really. If the result is something that the market does not like, we might see a prolonged reaction to it. But even then, you are right; fundamentally, things are unlikely to change dramatically in either case and as a result the market will perhaps overlook and go back to what they were doing before the event.

Anuj: How do you approach the pharmaceutical sector after the big fall that we have seen over the last few days and of course, there is a risk that if Clinton comes on board then pharmaceutical stocks could be under pressure?

A: Pharmaceuticals has been neglected or rather underperformed given how things are changing from the investors’ perspective. There are people who are looking at it as a value option particularly those companies which have seen the Food and Drug Administration (FDA) issues behind them. In terms of the impact of the election by itself again, I do not think there will be a fundamental change there. Obviously, there is a need for Indian companies to move up the value chain in terms of not just operating in the cheap generics markets which several of them are doing. Now, if you pick your choice and play the best positioned companies as far as capabilities are concerned, as far as their compliance to FDA and sort then there are people who are looking at it quite closely as a value buy.

Latha: The other sector is the technology sector, the one that might be impacted if it was a Trump victory? We have generally seen that protections rhetoric is very strong during the election but it does not get translated. In any case, how are you approaching that sector?

A: Much like pharmaceuticals, the sector has been going through some sort of a consolidation after having a great set of three-four years until 2014. Since then, a lot of the underlying changes in technology broadly called as digital - that has created some sort of disruption in the way the CIOs and CTOs purchase technology or invest in technology for their corporate needs in the West - that has also gotten reflected in the slowdown in growth for Indian IT companies.

Now, Indian IT sector has woken up to that need and has begun investing quite heavily. And usually when such changes happen, we see that there is a lag in which Indian IT companies catch up to it for two reasons. One is laggards in terms of investing; sooner or later they will catch up, but second, in the initial stages a lot of the work is high value but low volume but as it gets rolled out across their operations then their high volume job generally comes down to Indian IT.

So our view is that it is difficult to time it, but a couple of Indian IT companies which are investing heavily will sooner or later reap good dividends. So, it might be an interesting time to look at that sector.

Anuj: Hypothetically, if Trump wins, what could be the extent of fall in global markets and as long-term investors, how would you approach it?

A: It is very difficult to gauge the extent of the fall given a lot of it is driven by liquidity. There are leverage positions in the market, so any reaction will be amplified to that extent and it makes it that much more difficult to assess that. Having said that we see that as a buying opportunity; we do not see any material changes in that event given the American political system, American democratic system is fairly well-equipped in terms of checks and balances to rely on one individual to make much of a difference. So you have seen even with Obama’s efforts on Obamacare, it is not easy to push through your agenda as it seems in the run up to the elections which remains largely rhetorical in nature. So, if there is a massive negative reaction we would view that as a buying opportunity.