Rebalancing of portfolio by reducing fixed income and increasing (at currently reduced prices) the equity exposure would be a sensible strategy.
We need to be mindful of the steep drop in tax collections owing to lockdowns and their after-effects. As such on a net basis, there would be no major net benefit from falling crude prices, but it certainly helps in handling the COVID-19 crisis, Anil Sarin, CIO- Centrum PMS said in an interview with Moneycontrol's Sunil Shankar Matkar.
Q: Have you seen any redemption pressure after the steep fall in the equity market led by FIIs?
A: No redemption pressure as yet.
Q: Do you feel the market seems to have priced in most of the negatives? What is the way forward for market?
A: Valuations have become attractive, and COVID-19 worries are adequately priced in. After a few quarters, it should be business as usual. But the markets are going to remain focused on contagion for the time being. As soon as there is moderation in incremental contagion, markets should revive strongly.
Q: As everyone is saying valuations are more attractive now, what are your thoughts?
A: Without giving individual stock recommendations, one can say that most of the earlier outperformers would once again resume their outperformers once COVID- 19 settles down In fact, leaders in different industries would emerge stronger and increase their market share in the coming months. All the more reason to buy them at these reduced prices.
Q: Generally investors look for gold or US dollar for safe haven, but this time every asset class is caught in a bear trap. What would be your advice?
A: We agree that all asset classes have got hit simultaneously. But as the dust settles, USD and gold should outperform. That being said, over the medium-term equity offers the best combination of liquidity, easy understanding and good returns amongst these three asset classes.
Q: Crude has lost more than half of its value in the last month due to lower demand and lockdown in a major part of the world. Do you feel it would benefit India?
A: Crude fall is clearly a plus. How best to use the windfall is the government's prerogative. We need to be mindful of the steep drop in tax collections owing to lockdowns and their after-effects. As such on a net basis, there would be no major net benefit from falling crude prices, but it certainly helps in handling the COVID-19 crisis.
Q: What should be investors' strategy now with respect to their portfolio?
A: It is seductive to think we should get out now, and re-enter once the medical emergency subsides. But practically speaking, staying invested despite steep losses is the best course of action. In fact, rebalancing of the portfolio by reducing fixed income and increasing (at currently reduced prices) the equity exposure would be a sensible strategy.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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