SUMMARY
“We love the small and midcap space, clearly. However, currently, every other company that we look at is trading at 52-week highs, yet, to support this, the fundamentals of those companies have burgeoned—in most cases,” says Sharma.
More carnage is what we wish to see so that more opportunities to invest reemerge. Fortunately or unfortunately, as soon as there is a fall in markets due to macro headwinds (US recession fears, BoJ action, geopolitical tensions), the liquidity sitting on the sidelines arrests that market fall. With ₹20,000 crore coming in as monthly SIP, the selling executed by FIIs is being counterbalanced by DIIs.
More carnage is less likely as a result. However, these one-day shocks will reoccur on a regular basis.
The results of Nifty50 companies have been rather strong. If I look at the main sector, which is banking, performance has been stellar. Banking is carrying the Nifty at this point. If you look at IT, which is a major sector in the Nifty index, the results were flat.
We love the small and midcap space, clearly. However, currently, every other company that we look at is trading at 52-week highs, yet, to support this, the fundamentals of those companies have burgeoned—in most cases. That said, there is still value in some spaces and sectors, but the investor needs to go deep into the value chain to find something worth buying.
I am honestly neutral about FMCG. It’s a good sector for defensive investment; it’s perhaps even the “safe haven” of stocks. But it’s a heavily concentrated sector; most of the growth, if you notice, comes from just 2-3 companies, not the sort of performance we look at. However, markets have been severely volatile this year, and FMCG is a good choice for investors who are just starting out or need some stability in their investments.
Overweight on telecom, infrastructure, and pharmaceuticals. We’ve been enthusiastic about these sectors for quite some time, and it has been interesting to see the turn of events. These sectors have not just ours but the government’s attention too, and we are looking at them with a top-down strategy. We are well invested in these sectors in our portfolios; in fact, some more things are coming up very soon in one of these spaces.
We are underweight in IT and PSUs. We’ve always refrained from investing in PSUs simply due to their dependence on the authorities. IT, on the other hand, has been muted for a long time now, and with heightened concerns about the recession in the US, a recovery isn’t in near sight.
Our strategy at Green Portfolio is really simple. Stay patient, sit on cash, look out for opportunities, and focus on the fundamentals. We have always been consistent with our strategy. Even now, when the market has been severely volatile for over six months, we are staying calm during the chaos to find good value during crashes. It may seem contradictory, but we look forward to a couple of crashes here and there to be able to take advantage of the best opportunities.
From a broader and long-term perspective, the youth upskilling initiatives are noteworthy. If implemented well, they will surely help the productivity of our labor force, something that’s very much needed even now.
As regards sectors, infrastructure is a personal favourite for me, and the infra allocation along with tourism development ideas would see infra turning even bigger.
A smaller sector that we’re eyeing is shrimp, with new initiatives for financing in the industry, and I’m eager to see how that turns out. Lastly, customs duties being reduced for numerous industrial inputs like those for solar energy, chemicals, etc. is something that industries can really benefit from.