What is your current positioning, sitting on a pile of cash or already beginning to deploy that and if so where?
We were cautious and were sitting on some cash. At the same time, since this month beginning, we have started deploying the cash. We have told the members in our advisory and those whose fund we manage, to gradually become invested into the market. Since last budget, we were bearish about the market but we changed our position from this February onwards, post Fed meeting. Now we feel the overall dovish stand on all the central banks will continue and on that basis, the absolute pessimism will gradually subside.
We have been looking at some of the themes that are playing out today. IT for instance. What is your take over there? How bullish are you on IT at the moment?
Aveksat Equity is focussed basically on the long term. We are not trading on day-to-day basis movement of the market and at the same time, we have no long-term view on IT because if there is a slowdown in the US, there may be an effect on the IT stocks. These are not very cheap to look into.
Rather, we are looking into domestic consumption and domestic investment cycle recovery though for the last one year it did not play out. But that does not mean we have left or really sold any of our positions. We are holding it. Though we did not generate much return out of that last year, but we did not lose much money.
Our focus was on protecting the capital to a large extent possible. Though we had our own share of mistakes, own share of losses, but net-net, we have been able to protect the capital or at least arrested the fall in our portfolios.
Within the domestic consumption theme, what are you bullish on?
On valuation basis, we are bullish on various stocks, various sectors and areas primarily in areas like cement. That is one area where we have seen volume is picking up but for different reasons at different areas, the price has not picked up. Over a period of one, two years, this will definitely do well.
The beaten down areas of NBFC and chemical sectors may have pockets where we find value and we are slowly investing into those areas.We are buyers right now, slow buyers and we are of the opinion that the total pessimism in mid and smallcap area has reached the bottom sometime back.
We think that bottoms have crossed and we can only see uptrend from here. Maybe it will take time and maybe it will be volatile but we think post election and post Q4 results — which incidentally will coincide in May — we can see a positive outlook of the market.
Post the GST relief in real estate, the entire sector absorbed the news well. We have been anticipating it. Are you looking at opportunities there?
Yes, we are actively looking into opportunities in the real estate sector and at the same time we are also a little bit concerned about today’s circular about the deposit scheme. We do not know how it will pan out for real estate sector. The valuations of a lot of companies and potential opportunities are quite good. Now, we do not have real estate stocks in the portfolio but we are actively looking into it, primarily Oberoi Reaty to name one.
What about Adani Ports? In terms of the news today and in terms of the concerns of the market with regards to the intra group transaction, what are your first thoughts on that deal?
To be very honest, I did not follow this news item because we are not actively tracking Adani Group but at the same time, we feel the corporate governance news are coming every now and then and rattling the stocks. We have actually extricated ourselves from any stocks where there is an issue of pledging or where we have seen on earlier occasions, too much inter-company related transfers.
Primarily, our investment focus in on the long term basis a little bit on stable portfolios but we are also looking for growth in mid and smallcap space. We have created a basket of stocks where we want to focus. These have no pledged shares, minimal debt and corporate governance issues are fine.
We have made mistakes of chasing a few stories last year which panned out in too complicated a manner, We want to stay away from these kind of companies and businesses for the time being.
Have you turned bullish on any of the realty ancilliaries, cement, paints and tiles after the GST cut on real estate?
Absolutely. We are invested in the ancillary space rather than in direct real estate apart from the few large ones which I mentioned earlier. In ancillary space, there are many stocks like anybody can look into like Cera, Kajaria, Somany Ceramics. In cement space, we are looking into KCP, Sagar Cements and NCL Industries and stuff like that. None of these are actually advice to buy or sell, we are just looking into it and in some we have positions. Since we do not trade, we will hold it for a longer term.