Moneycontrol
Last Updated : Aug 07, 2018 11:29 AM IST | Source: Moneycontrol.com

Worst seems to be over for market in terms of price reduction: Kenneth Andrade

After recent correction, Andrade feels some good companies are available at cheap valuations.

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The Nifty50 rallied around 1,400 points from its March lows to hit a fresh record high above 11,400 after falling more than 10 percent from its previous all-time high seen on January 29.

"Currently, valuations are at reasonable levels and the worst seems to be over in terms of price reduction after the fall in February and March followed by recovery along with consolidation. The recovery is on account of earnings which are largely better than expectations," Kenneth Andrade, Founder and CIO of Old Bridge Capital Management told CNBC-TV18.

Even sequential earnings are better than expected, he feels.

Elections

Volatility due to such large events is preditable and the market will react post that event, he said.

He believes the key thing is India has growth cycle and corporate insolvency is not a problem here. "Balance sheets are in place to take advantage of growth and results recovery is happening in next year or may be delayed by a year."

Consumption space

After recent correction, Andrade feels some good companies are available at cheap valuations.

He said consumption is an interesting space as these companies hold on to their balance sheet, earnings metrics, etc. "We see reasonable amount of growth."

Media space

Andrade said there has been intense amount of pricing pressure in the space and consolidation will play for another one or two years before the advertising spend starts. "Spending has not yet happened majorly now."

Steel

On the metals space, he said it behaves reasonably different from world companies and even their profitability is different from global firms. "Overcapacity is out of the cycle and metals companies held their mojo because of tariffs imposition etc."

He preferred wait-and-watch approach for this space as it is in the middle of commodity cycle. "We are not daring to add more companies from this space."

Overall Sectoral View

Andrade sees exhaustion of capacities of manufacturing, utilities, power generation, basic industrial products in metal space etc by 2020 followed by fresh capex which will start from 2021-2022.
First Published on Aug 7, 2018 10:22 am
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