Prudent to be stock specific; consumption remains key to domestic recovery, says Tata MF

"Therefore, to say that it is a buy zone may or may not be premature. So, we are keeping an eye on the stocks, which we like, at the prices we like and we are looking at buy zones more on a stock specific and sector specific level,” he said in an interview with CNBC-TV18.

When asked which stocks he was looking at, he said, “We cannot comment on the stocks but some of the stocks on the banking side - corporate banks could come back again in the buy zone if the correction continues. Also, on the midcap side, while the valuations were running up in January, we are seeing them cool off a bit and so we could get some quality midcaps at decent valuations. The third segment would be playing rural recovery. So, if our thesis on rural recovery is right and we get those sectors or stocks at reasonable valuations in this correction, those are the areas we would go to first.”

On rural consumption, he added, “The outlook for rural consumption side has improved given that the rabi crop has been good, food inflation has gone up which typically would help rural incomes. Consumption as a segment will never go out of favour in India. We need to be cognisant of the fact that certain part of consumption has slowed down dramatically over the last one year especially the discretionary side and whether that can get a lift from rural incomes increasing over the next 12 months is what can become a more exciting theme for consumption rather than going after the same names.”

When asked if some spaces in India like chemicals could benefit from this virus, he said, “That shift to India had started three-four years back especially in the chemical space. We all know that because of the pollution norms getting tightened in China and the costs there going up or even some plant shutting down because of the pollution related incidents, the shift had started long time back. The current situation can only help that process but I don’t think this in itself is going to be a big enough driver for a new wave of that shift.”

However, one should not make presumptions around how this situation would help us relative to other countries, unless we have seen the back of this virus, he warned.

When asked how high were the chances of the big bear market in 2020 because of the global slowdown and the right way to approach it, he stated, “We have to look at India and the world separately. Within India, we have had our own slowdown for the last one and a half years and it has been a very sharp slowdown. Now we are seeing signs of how we can come out of it even though it is going to be very gradual. So, from that point of view, we are probably going to be looking at a slightly different trajectory of economy compared to the world and we are more insulated than the world and that helps us. However, a broader risk-off in equities would not help.”

"Moreover, what is going to support global growth is the fact that central banks are going to throw everything at it and also in a year when there are elections in the US, everything will be done to make sure that huge slowdown in the economy is resisted or avoided at all cost," he added.