Long-term investors should enter now: Alchemy

It is perhaps the right time for long-term investors to enter the equity market, says Hiren Ved, Director & CIO, Alchemy Capital. The Nifty and Sensex touched their life-time highs on Friday. Though most experts expect the journey ahead to be fraught with volatility. 

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However, coupled with the fact that there has been an improvement in the macro data, second quarter earnings too have been above expectations, says Ved. The stable rupee has also been a big positive for the market, he says. He sees the market moving upwards from the current levels. He does not see the market revisiting the lows anytime soon. He feels pharma and IT will continue to perform.
According to him, the market is yet to price in elections. He feels the market will be closely tracking the state polls. Below is the verbatim transcript of Hiren Ved's interview on CNBC-TV18 Q: This market is at an all time high but it has left everyone confused and people are far from euphoric, what is the investment advise to both a long duration investors as well as someone who is just working with a trading horizon in mind?
A: Typically for traders, it is all about momentum. I don’t have much to advise short-term traders, but I think for a long-term investor this is probably the right time to get into equities if they are underweight on equities in India. I think that at the margin, we are beginning to see the improvement in the macro data, obviously the worst for the rupee is also behind us, which was one of the big catalysts for a correction in August and September.
I think that there was a lot of fear that Q2 numbers would be very bad but that has not been the case - by far the Q2 earning season has been pretty good. I think that after the new Reserve Bank of India (RBI) governor came in there is far more confidence in the stability of his policy and their ability to manage the rupee and the current account deficit (CAD). So I think on the whole, the incremental macro is better. People are definitely underowned in equities in India and I think that the market is also to some extent giving a probability that there could be a government of its liking in 2014. So I think all of this makes it an interesting opportunity to invest in India right now. Q: If it is the right time for retail investors to enter from a long-term, what would you recommend them buying because so far markets have been very polarized, will the polarization continue or the underperformers, the laggards will start now performing and that is where the risk reward is more attractive?
A: I think frankly speaking, quality has no substitute. So to say that – obviously there may be some pockets in the market probably largecap fast moving consumer goods (FMCG) stocks or consumer stocks, which maybe expensive compared to their historical valuations but I think where there is quality, it will always pay.