Invesco MF's Taher Badshah: Investors need to be judicious about exposure in auto stocks

Taher Badshah, chief investment officer for equities at Invesco Mutual Fund told CNBC-TV18 in an interview that attractive valuations have led to interest revival in midcaps and not the assumption that domestic growth cycle will rapidly turn.

“Midcap and smallcaps have turned attractive on a standalone basis and even if you were to drastically reduce your assumptions on growth there are good number of pockets of mid and smallcaps that are reflecting value and that is what the market is starting to realise,” said Badshah.

Talking about Invesco's portfolio allocation, he said, they have companies which they think will become larger in their own merit over time. “Where we are focused right now is on consumption related stories and some smaller industrial plays. We are trying to look at companies which are addressing bottom of the pyramid opportunities," he added.

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With regards to financials, he said that there are some companies which despite going through stress are reasonably decent long-term growth platforms and have suffered less during the recent crisis, especially in the non-bank finance company (NBFC) space. “We have to look at companies, which have the capability to transition to become larger entities over a period of time,” he said.

Asked about possible approach in the auto space, he said: “Autos the way money has been made over the last 5-10-15 years, I don’t think we will be making money in the same way next 5-10 years. One will have to be a lot more judicious about the choices in autos and one cannot have a sweeping exposure to that segment.

"It would be better to play the consumption theme via some other sector than autos," he added.