Despite the recent volatility, this is a good time to be looking for bargains in the mid- and small-cap space, says Dhiraj Sachdev of Roha Asset Managers. The investment firm manages over Rs 350 crore of assets.
Stock markets globally have seen some wild swings in the last couple of weeks as investors fret about the latest COVID variant Omricon and also the possibility of rising interest rates.
Last evening US Federal Reserve Chair Jerome Powell said the central bank would wind down its monthly bond purchases ahead of schedule, irrespective of the impact that Omicron may have on the economy.
“Policy normalisation can impact foreign portfolio flows but cannot change fortunes of a good enterprise over long run. Hence, it is better to stick to company specific fundamentals,” Sachdev said in an interview to CNBCTV18.com.
His advice to investors is to focus on the company’s business model and earnings potential instead of trying to buy at the perfect price.
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Timing the market is a futile exercise, given the wild swings caused by the mere mention of policy normalisation, he said.
While inflation is a cause for concern and could crimp demand, Sachdev said companies with pricing power are the ones to watch out for.
“We look at the cost side of the equation, whether it is temporary or not, or do companies have the pricing power to pass on such inflation (to end-consumers),” he said.
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He believes capital expenditure cycle has just begun across many sectors and so engineering and capital goods will do well. His other favourites include pharmaceuticals, chemicals and cement companies as a quasi-infrastructure play. He is bullish on textile players considering the growth in exports and on technology companies as they have shown to be capable of sustaining high growth rates.
On financial services, the market veteran says worst may be behind and that disbursements could pick up as asset quality improves with an uptick in the economy. He added that real estate and building products business are also expected to do well.
On the frenzy in the IPO market, Sachdev said valuations in many cases were exorbitant. “We are avoiding pricey IPOs and also expensive stocks in the consumer businesses even if they are reputed names”
(Edited by : Santosh Nair)
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