Playing the rally but prepared for a pullback: Shankar Sharma

“In 2004 a massive emerging market bull market started in which India was a prime participant. That was driven in some sense by a weakening dollar which drove out money from the dollar assets into non-dollar, into emerging, into commodities, we saw huge bull rally, huge oil rally. In some sense, it is a move away from US dollar into emerging, into commodities – let us just watch how things pan out. Investing is not a game of complete certainty, you will never have that at all points in time. I think there is a good chance that we are seeing life come back into emerging markets after a 10-year lifelessness in which all emerging markets have done nothing much,” Sharma gave a historical perspective.

On sell-off possibility, he said, “We always fear of sell-off. Central to our belief is that, if you avoid the big losses, you will come out massively ahead of the rest of the pack and massively ahead of the market as well. So avoidance of big losses is central to our fund management philosophy. In that mindset, we always fear a big sell-off and in particular at a juncture like this where markets have had a very smooth – I think this has been the smoothest rally I have seen in a long time. We are not sitting it out, we are playing it but we are playing it with a perspective that be prepared for a sharp pullback because that is least expected.”