Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
The Economic Times

BFSI, pharma best spaces to start buying now: Aishvarya Dadheech

Z19
Stick to those very strong fundamental private banks even at these prices and a couple of NBFCs that have a very strong asset as well as liability franchise.
How are you analysing the damage to your funds because of this correction? Where have you been averaging and where are you buying additionally?
What we are witnessing are unprecedented times. This is almost like a flash crash that has happened in this last one month and the cut has been across the board. Even the quality businesses have seen a deep cut. We believe that these are the businesses we are very comfortable about with lower debt, high ROEs, and those businesses which have got a moat; basically we short those businesses which can survive this kind of tough environment. However, looking at the global side, what we are witnessing is that the volatility which has been very high is most likely to stay here for couple of more weeks because it is not just equities that have taken a hit; all other asset classes right from your commodities to debt (public and private), currencies have taken a hit. On top of it we are seeing a lot of redemptions and liquidations happening on the global side. So until and unless we see things on COVID-19 settling down, we believe this volatility is here to stay. Volatility should be used by the investors to create a portfolio over the gradual time or let us say four to eight weeks and that would be like great levels to buy into this market. Valuations have become very attractive. More of the external factors are impacting India. At worst, we will see one or two quarters of either very low growth or no growth for the time being. But the cut which has happened in the market of almost more than 30% is more or less unwarranted. We are carefully watching how the situation is panning out on the virus and how worst it can get but I think the opportunity is very very attractive.

How have you analysed the authority’s response to this panic? When you talk to the various companies you are invested in, what is the feedback you are getting on their preparation?
Our government was way ahead or way proactive in first recognising this as a problem. We saw initially saw they cut down international travel to some limited countries and then the screening was in place. Now we have seen that it has been completely shut off. So we believe the government is trying to do everything right to manage it as far as possible. Having said that, the impact on the supply side, the risk is now more or less taken care of because China is basically a factory for the global space and supply is anyway reaching back to normal in China. We will have to see how it will have an impact in India because when things get uglier from here onwards, there would be supply side issues which will come from India’s best production houses. But our interaction with them has been that they have enough inventory that can take care of stock for at least six to eight weeks from here onwards. The bigger issue is more on the demand side. Exhibitions, movies have been shut, which are the right steps, but this is also impacting the demand side for some of the businesses we are holding. I think they will be able to manage it because they are the one who have the highest leadership in that space.

What is the most attractive space right now?
What an investor should be looking at is businesses that are more inward looking where the exposure is more domestic because what we believe is that an export-oriented theme might not perform at least for the next three to four quarters going ahead. Those businesses which will benefit from lower crude prices, lower interest rates and more or less businesses which may believe they have the capacity to survive the next tough one or two economic environment should be looked at. In short, BFSI is one space which is looking very-very attractive given the carnage which we have witnessed very recently. Stick to those very strong fundamental private banks even at these prices and a couple of NBFCs that have a very strong asset as well as liability franchise. Other than that, we really like chemicals as a segment. We believe chemicals will be able to weather this uncertainty in a much robust manner going ahead and though there is always a fear about consumption, we believe consumption will be one sector which will remain upbeat right from the performance. Also, pharma is something that will continue to do well as of now; so stick to those brilliant companies which have respect to return ratios. We believe that they will be able to withstand this pressure in the most efficient manner.
Stay on top of business news with The Economic Times App. Download it Now!