As we come towards the end of Smart Portfolios fifth season, Taher Badshah, senior vice-president and co-head equities, Motilal Oswal, tells Jinsy Mathew how, even though some of his picks maybe heavily underperforming, the inherent value of these stocks will help them recover faster when the current pessimism gets over.Edited excerpts.
What are some of the factors that can determine the market trend in the near future?
We think the markets will be significantly governed by the government and the Reserve Bank of India (RBI)s policy action in the near future and will likely to remain very volatile. However, after the recent steep correction, a modest recovery cannot be ruled out.
As and when the tapering of QE (quantitative easing, or the stimulus programme of the US Federal Reserve) starts, do you see a case of foreign institutional investors (FIIs) pulling out from Indian equities?
FIIs currently are already redeeming money from Indian equity and debt markets in anticipation of likely QE tapering later this year. Hence, I would not expect FIIs selling to aggravate when actual tapering commences.
Idea Cellular and Bajaj Corp are likely to outperform overall industry earnings growth in the next two years and we continue to remain constructive on these names despite having delivered good returns in the recent past.
Would you start bottom fishing or would you hold on to cash in the current market scenario?
We remain largely fully invested in our portfolios at all times and hence, do not look to bottom fish or time markets as such. We reckon good quality businesses across sectors with long-term franchise value. If available at inexpensive valuations due to the current market correction, they will be most attractive investments from a medium-to long-term perspective.
Whats your conviction idea on Sundaram Finance, which has weighed on your account heavily?
Sundaram Finance is a well-run NBFC (non0banking finance company), with embedded value in its mortgage finance, asset management and general insurance subsidiaries, and is available at reasonable valuations. We believe it will be one of the first ones to perform as and when the scenario improves for the banking and NBFC sector.