Marcellus Investment Managers has exited from asset management companies like HDFC AMC and ICICI Securities citing increased competition.
After a stellar run during the demat boom, the two stocks are down 25 percent and 35 percent respectively this year. In an interview to CNBC TV18, Pramod Gubbi, co-founder of Marcellus Investment Managers explained the rationale behind exiting the companies he called fundamentally sound.
"While we think they are fundamentally good companies; we think the industry structure is sort of deteriorating from a competitive intensity, entry of new players, which is reflecting in pricing and yields in both of these businesses,” he said. The exits are from Marcellus' "Kings of Capital" portfolio.
Marcellus has recently placed its bets on private lender ICICI Bank, which hit a 52-week high recently before correcting. The stock is currently up 13 percent this year. Gubbi said that they view the bank's change in risk appetite positively and that it will do well in the next decade.
Among his other preferences, Gubbi highlighted specialty chemicals companies due to the tailwinds they posses and health insurance companies due to the low penetration, which provides a huge scope for growth.
Indian equities ended at a two-month low on Monday, extending Friday's drop. BSE listed companies have lost market capitalisation of Rs 11,000 crore over the last two trading sessions. Gubbi said that investors should be prepared for bouts of volatility.
“We do not know when interest rates will stop rising, when inflation will come under check and markets tend to swing on either side of the equilibrium in times like this," he said.
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