'It will be a rangebound market '
Waqar Naqvi, Chief Executive Officer, Taurus Asset Management spoke to Jinsy Mathew on the markets, commodities and investment strategy
Liquidity has kept our market afloat so far. Do you see the weak macros catching up anytime soon?
It is difficult to predict for the immediate term since as of now as there is a change of guard in the Finance Ministry. Also, over the last one week there have been some positive noises and early signs of action from the office of the new Finance Minister. But one cannot be very sure when it comes to political support from other parties. So there is an equal chance of things happening or inaction from the Center. At the same time, I don’t see the markets crashing from the current levels. Broadly speaking it will be a rangebound market with maximum downside capped at 10% from the current levels. On the other hand, if some public sector units come up with their FPOs and/or if FDI in aviation is given a green signal we may see a 10% spike in the market.
FIIs have been cautiously optimistic about India. Do you see the same about retail investors?
According to me, FIIs are keeping a close watch as to what the new Finance Minster is doing in terms of putting the Indian economy back on track. Also, for those who came in when the Indian Rupee was at 45-47, an exit at the current currency value would mean 15-20% loss only on the currency front, forcing them to stay put. On the retail side, the inflows in mutual fund equity schemes have not been worth celebrating or let’s say they have been muted. However, long term debt schemes and MIPs have witnessed renewed interest. This shows that retail investors are weary of equity at this point in time.
Which are the pockets that you are most comfortable investing in currently as an individual?
From the equity space, pharma, FMCG and banks (available at attractive valuations) are the sectors to look out for. On the other hand, infrastructure, commodity and IT are some the counters I am not bullish on. Also, I would allocate a lesser portion to long term debt and a further smaller portion to gold.
What has been your investment strategy at Taurus?
Taurus has been conservative on equities with cash levels between 5-7%. We have made some very sector specific calls and are mainly in favour of large caps. Midacps which were available at attractive prices were also added.
Are you worried about crude and Rupee at the levels they are now?
Though crude price movements are the most difficult to predict, yet I don’t see the prices moving upwards from the current levels considering the global economy is slowing down which sets the ground for demand to taper down in the coming days. However, if any geo-political tension erupts in mid eastern region or any situational drop in crude output, we may see the prices moving north. Also, if a quantitative easing (QE 3) comes across , crude will rally on the back of liquidity in the system as will other commodities and equities. On the Rupee front, I don’t see any triggers to move the currency either ways. Rupee depreciating further from current levels looks unlikely.
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