Prashant Jain uses cricket analogy to explain current market situation, says singles are preferred over boundaries

Prashant Jain, founder and CIO of 3P Investment Managers

Prashant Jain, founder and chief investment officer (CIO) of 3P Investment Managers, used a cricket analogy to explain the current market situation: "We are now batting on a pitch where the ball is turning and the bowler is maintaining a good line and length. In such conditions, defensive play and scoring singles and doubles is preferred over boundaries."

Here’s his advice for navigating these conditions:

Focus on Quality: Stick with strong, sustainable businesses and avoid weaker ones with temporary growth or shaky fundamentals.

Prioritise Valuations: Be mindful of the price you pay. When companies miss growth expectations, even slightly, the market can react sharply.

Manage Expectations: Adjust your return expectations to be more realistic in this market, where the scope for high returns is limited.

In short, Jain says, "Reset your return expectations and focus on quality and valuations. This is not the market to chase high returns.”

Watch full interview here 

He also notes, “If you overpay for a stock and growth slows, markets can heavily penalise these companies. We’re seeing this with consumer companies, which are high-quality, yet are being penalised due to slightly weaker growth.”

In his recent newsletter, Prashant Jain noted that his fund's strong absolute performance was driven by robust market returns, while its relative outperformance came from exploiting undervalued areas in the market.

However, he now cautions that market returns are likely to moderate, as there is a dearth of undervalued opportunities. Additionally, the recent rally in Chinese markets may prompt FIIs to shift some flows away from India, warranting a more cautious approach.

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.