Timing the market is not possible. However, at this juncture, it is better to have a staggered approach. The choice of stocks vs mutual funds is always an individual choice. I will advise buying the Index fund right now, Satish Kumar, Head of Equities, Equirus Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) What would you advise – lump sum or staggered approach in direct equities or mutual funds?
A) Timing the market is not possible. However, at this juncture, it is better to have a staggered approach. The choice of stocks versus mutual funds is always an individual choice. I will advise buying the index fund right now.
Q) We have already seen a big casualty in the form of IndiaNivesh Securities broking arm shutting down the operations. Do you think this could just be the starting?
A) The broking industry will see more casualties in the near future.
Q) Where are the hotspots in terms of investment in the current scenario?
A) Right now the stock prices have no meaning as investors are trying to price their worst nightmares. So pinpointing what will go down because of the fundamental reason is futile.
Hotspot test is simple from now on (i.e. if markets fall further) higher the FII holding higher the correction.
Q) What is you take on the ESG sector? Could they turn out to be big winners once COVID-19 crisis is over?
A) It’s a fad and like all fad, it will also be over pretty soon. No company can survive which doesn’t care from its customers or employees. Social impact well that’s debatable.
I can argue that even carmakers are not ESG compliant (because they make a car which causes pollution) why to single out only tobacco or fossil fuel companies.
Q) With the starting of April we also start a new financial year – what are your expectations from the FY21? What are your views on earnings, markets, flows, as well as demand?
A) Excel extrapolation is a simple job and as an analyst, I am also forced to do it. However, as of now, no one knows what will be the earnings growth or decline.
One can pick any number as per one’s convenience. Market flows will remain muted until market recovers by 20 percent then we can start seeing some flows back to the market
Q) Once the lockdown is over and we (the whole world) come out of COVID-19 - what will be the new normal which the world will be looking at in investments, insurance, food habits, consumption etc.?
A) Human beings are extremely resilient and have the habit of forgetting the painful past. While for some months one may wear masks and maintain social distance; however, the fatigue of changing ingrained habits will be too much.
Moreover, please remember at worst, it will take 12-18 months for vaccine and then we will be back to basics in no time.
Q) We have seen massive wealth erosion in most of the top-quality stocks in FY20, and as we step into FY21 some of those names could give multibagger returns if someone is investing in them now. Could you highlight 3-5 such stocks that hold that potential?
A) Multi bagger we don’t know - getting 2X, 3x returns requires patience and a hell lot of it. For the next 12 months scenario we like large caps. Our picks are HDFC Bank, ICICI Bank, Britannia, PI Industries, Ultratech, and Siemens.
Q) Any particular sector(s) which investors should go underweight on at least for the next year or in the current FY?
A) May be where the mass gathering is required like malls cinema halls. What I mean here that one can be underweight sectors like Retail, airlines, etc.
As I said earlier for some months people will remain cautious and during that period P&L of many companies will take deep hit. Having said that, during the P&L hit these companies will give excellent buying opportunities.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their 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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