homemarket Newsstocks NewsUsing correction to buy stocks with long term horizon, says Sundaram MF’s S Krishna Kumar
Using correction to buy stocks with long-term horizon, says Sundaram MF’s S Krishna Kumar
We are using this correction to participate into ideas that we want to build from a longer term perspective, said S Krishna Kumar, CIO-equity at Sundaram MF.
Globally equity markets have been selling off on fear of coronavirus spreading to other parts of the globe. S Krishna Kumar, CIO-equity at Sundaram MF said, while China is settling down in some sense, the spread of the virus in other geographies is unnerving the markets and a huge risk-off has built-up in the last one week.
"The US yields are reflecting safe haven kind of a move in the market and emerging markets are getting impacted and India too has had its share of flow out,” he said.
“So, definitely, the market will remain volatile in the short-term and could see a bit of pressure incrementally. However, the base case in the medium-term doesn’t change for us. Our view has been to buy those stocks which have moved up. So we are using this correction to participate into ideas that we want to build from a longer term perspective,” added Kumar in an interaction with CNBC-TV18.
He further said that they expect to see respite from coronavirus outbreak post March-April. Therefore would advise investors to continue with their systematic investment plans (SIPs) during these volatile times.
“There are many opportunities on the domestic side, be it financial services, capital market slated sectors, which have been under a lot of pressure and also some of the rural oriented plays with an expectation of improved rural output and income, over the next one year. Also a lot of defensive sectors including some of the FMCG spaces could see a lot of growth returning after 3-4 quarters of weakness,” Kumar added.
Commodity prices have been under pressure which is aiding margins of some companies, said Kumar.
On the pharma space, he said, “There is a lot of stabilisation of global generics' prices, so that is a positive. So, the domestic story continues to be a decent clip and that is a space where the house has been incrementally adding to the bets." Particularly on the midcap side there are a lot of positive stories that are emerging, ” he added.
According to him, a lot of positive stories are emerging from the midcap index as well.
However, the house is neutral on IT. They believe it is a tactical play over the near term and not a structural long-term play at this point.
On real estate sector, he noted, “The liquidity flows are improving on a very slow pace unlike what one anticipated. The government’s efforts to push more liquidity for troubled developers is not flowing through. There are issues on the ground. So, there is a huge consolidation that is happening on real estate where companies that have healthy balance sheets are doing well and the rest are struggling on the ground.”
According to him, beyond the listed companies there are numerous unlisted players, which have a lot of structured finance deals, which are suffering and that is where the pain is. "Therefore, from listed universe perspective many of the companies have better balance sheets and access to capital and good commercial properties which they are putting out through Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) and hence are able to create liquidity for themselves. So we should be positive from listed space perspective on real estate,” added Kumar.
First Published: Feb 27, 2020 10:43 AM IST
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