Sunil Singhania warns against bravery in uncertain times, calls the selloff 'frustrating'

Despite the rout, Sunil Singhania isn’t making bold bets yet. “In a falling market, this is not a good market to show bravery… no one is going to take a brave call because you're not sure about what is going to happen tomorrow.”

Indian equity markets are reeling under the ripple effects of a global trade standoff, investors should brace for more volatility, Sunil Singhania, the founder of Abakkus Asset Managers told Moneycontrol on April 8, adding that the abrupt tariff levy and the retaliatory action by China, both have created 'total chaos' for markets and businesses alike.

“What can you do about things which are not in your hands,” Singhania lamented during a conversation with Moneycontrol, reflecting investor helplessness after benchmark indices fell nearly 3% on April 7. “Thursday, the reaction was mild, we saw some impact on Friday, and much worse on Monday,” he said, adding that disbelief quickly gave way to panic once the retaliatory tone from China became clearer.

While acknowledging that the magnitude of the market reaction may have been high, Singhania said it was 'very logical' and for the next 15-20 days or a month till there is some clarity, markets will continue to 'swing wildly'.

He drew a distinction between the current selloff and the pandemic era crash. “During Covid, there was a lot of uncertainty because it was a new animal… Here, it is very clear—it is man-made. So, it can get allayed also pretty fast.”

Still, he warned that outcomes are hard to predict because so much hinges on one person. “That person, no one even knows what he's going to say in the next one minute… When egos are at play, rationality and logic go for a toss.”

Despite the rout, Singhania isn’t making bold bets yet. “In a falling market, this is not a good market to show bravery… no one is going to take a brave call because you're not sure about what is going to happen tomorrow.” Instead, he advocates staying nimble, and watching for signs of moderation before deploying fresh capital.

Sunil Singhania said the markets are still not offering deep value that warrants investors to go all in. He said that valuations in general have become 'reasonable' but some stocks still remain above comfort levels. Irrespective of whether stocks are impacted directly by the higher tariffs, stocks will continue to correct based on where valuations are pegged, and how earnings pan out. Commenting on retail major Trent’s collapse from Rs 9,000 to Rs 4,500, and the near 20% intra-day fall on April 7, Singhania said, “Nothing has changed. They’re still growing well. But the valuations are so expensive that it's a correction of valuation.”

On client sentiment, Singhania said investors are still willing to add capital, but are growing weary. “People are frustrated. It’s so sad.” While March was a stabilising month and India’s macro indicators remain strong — with low inflation, a stable currency, and controlled fiscal deficit —Singhania said 'this is like total crazy', and called the sudden turn 'devastating'. Singhania said that if markets continue to throw unpleasant surprise like this, investors are likely to cash out with whatever they can. “The priority is always to protect what you have,” he said.

“This is the time to be a spectator,” he said, with a touch of resignation. “It’s frustrating. You add on to the returns and then, one fine day, some niggard comes and just takes it all away.”

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