There is a lot of value left in thousands of Indian stocks. Identifying and buying them is the key, Porinju Veliyath, MD & Portfolio Manager, at Equity Intelligence India, said in an exclusive interview with Kshitij Anand of Moneycontrol.com. Investors should look beyond fancied names and be conservative as FY18 will be another rewarding year for stock pickers.
Q) The whole market is talking about a correction in the market? If you are a long-term investor is it really important?
A) Trying to predict the market is a futile exercise. We have been in a bull market for last 3 decades and will continue to be in bull market for next 3 decades. Any correction when it happens is an opportunity for smart stock pickers to buy their favorite stocks at discount.
Q) You gave nearly 50% return to your clients in FY17? What is your advice to small investors for the next FY18?
A) Stock picking is the game. There is a lot of value left in thousands of Indian stocks. Identifying and buying them is the key. Look beyond fancied names and be conservative, FY18 will be another rewarding year for stock pickers.
Q) What stock themes are looking attractive to you at current levels?
A) Turnarounds, I have been talking about this for some time now. India has many potential turnaround stories – both management and business turnarounds. Many managements in the past have been unethical towards minority investors and used to siphon off funds to avoid taxes and create personal assets.
In the changing environment, there is no incentive for this. Many of these managements are changing naturally, others will be forced to change.
Q) GST is a done deal now, what are the other half a dozen macro factors you are positive on in 2017?
A) Reforms are a continuous process, we are lucky to have a responsible, prudent government at Centre focused on improving ease of doing business and plugging the infrastructure deficit. We can look forward to more Land, Labour and direct tax reforms ahead.
Digitisation is going to create a level playing field for honest entrepreneurs. At the same time, we might have a disruptive time ahead with many traditional businesses becoming redundant with technology advancements. Reinventing businesses will only survive.
Q) You expect $100 billion fund-flow into equities from Indian households during next 18 months. It is a big sum. Do you think the approach of retail investors towards equities is slowly changing?
A) We are in the middle of a SIP revolution, Equity is the most attractive asset class and there will be big inflow from retail investors.
USD 100 bn is not a big amount it's just 5% of our GDP, less than a third of the planned spending in infrastructure by the government. We have been accustomed to thinking small, but now is the time to think big and make it large.
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