In the second series of interviews for Smart Portfolios, we have Ajay Parmar, head, research, institutional equities, Emkay, speaking with Ushamrita Choudhury on the current market and macro-economic scenario and his portfolio.
Over the past week, the benchmark S&P CNX 500 portfolio's value has declined 2 per cent to Rs 9.76 lakh, and Parmar's portfolio saw an erosion of value by almost the same percentage to Rs 9.7 lakh.
Vinay Khattar was the only fund manager to have a positive yield on his investments at Rs 10.46 lakh, up 0.2 per cent, while Shishir Bajpai's portfolio was down barely 0.1 per cent at Rs 13.16 lakh. Siddarth Bhamre's investments saw a fall of almost 6 per cent at Rs 7.96 lakh.
What is the reason behind such sporadic activity of late?
People should not get perturbed by market activities. There will always be chances for trading, but for the retail investor it is important to understand the value of being a good investor. The companies in which I have put money, Iâm sure, will have better returns at the end of the year.
What is the rationale behind the concentration of sugar and chemical stocks in your portfolio?
I believe it's a matter of time before sugar picks up. Although, currently there is a cap on sugar exports, the government will go with the production data made available to it. Any excess sugar production will ease the situation. For fertilizers, the government is unable to take a certain stand on the urea front due to political issues. However, the urea policy wonât impact pesticide companies much.
When do you intend deploying your cash in the markets?
I'll wait until there is a fair amount of clarity on the fund flow side. The day FIIs lodge a positive flow for three consecutive days, it's a good indication to buy. At the same time, I may sell if panic increases due to political reasons. At 21,000, we were chasing liquidity. Liquidity was in our favour, and we had substantial fund inflows, but valuations weren't in my favour. Currently, liquidity isn't in my favour, but valuations are. A fall is expected in the near future but from a long-term view, valuations look fairly comfortable.
Were there any positive or negative surprises in Q3 earnings? What is the outlook?
Q3FY11 results were a mixed bag. The focus on results wasn't as keen because the market was tuned more into domestic issues like inflation and liquidity. In the pharma sector, Cadilla posted good numbers, but others such as Unichem, Glenmark and Torrent Pharma weren't up to the mark. Banking did well, but cement, as expected, slipped. Real estate delivered a negative surprise, while IT managed a middling outcome. The next quarter could see downgrades if the domestic situation doesnât improve.
What are your expectations from the Budget?
People are expecting some bold steps will be taken, but politically, we're not very strong. Any big reversal of stimulus may not happen because doing so will hit GDP numbers. The Budget will be a non-event. While the government would want to withdraw the stimulus, there are financial, economic and political compulsions that will prevent it from doing so.