The Market Podcast | Height of uncertainty in markets! Mihir Vora talks about pockets of value
After being darling of investors in the past 5 years, private and public sector financial stocks could see a bounce back because the economy cannot turn around without credit growth.
April 27, 2020 / 05:12 PM IST
The market seems to be taking one step forward and two steps back which suggest that there is the height of uncertainty in the market as the globe has not seen this kind of situation before and investors are taking one day at a time, Mihir Vora, Director and Chief Investment Officer of Max Life Insurance who manages an AUM of over Rs 70,000 cr.
There are two forces that are moving in the opposite direction, highlights Vora. Number one is fundamentals – we know that GDP is likely to shrink all over the world, and on the other hand to counter the slowdown we have monetary and fiscal stimulus responses from most of the large economies in the world.
Back home, the Reserve Bank of India (RBI) also initiated many steps to counter the slowdown in the Indian economy due to the COVID-19 outbreak.
Where is the value?
The value in the market is in beaten-down sectors. “We are not talking about leverage companies or leverage stocks in the consumer discretionary space, but some of the good quality engineering cap goods companies which were beaten down in this downturn,” he said.
To that extent when economies globally and locally stabalise – we could see value unlocking in these segments, explains Vora. After being darling of investors in the past 5 years, private and public sector financial stocks could see a bounce back because the economy cannot turn around without credit growth.
March Quarter Earnings:
For the March quarter earnings, Vora is of the view that no one is looking at the earnings at the point in time for June as well as September quarter because half the industry is shut, and the other half working at less than 50 percent capacity.
“I think we should look through FY21, and focus on FY22 because it will be very difficult to say what earnings are going to be for FY21. If we look at this financial year then many would conclude that market is overvalued as earnings might not show recovery,” said Vora.
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