Global inflation likely to settle above last decade’s benign levels as geopolitics pushes countries towards onshoring/near-shoring. Need to focus on buying businesses which have pricing power to transmit inflation to the consumer.
The entire debate on small caps vs larger caps is irrelevant from a business analysis perspective – however it assumes significance from a retail flows perspective. Nimesh maintains his stance that large caps are relatively more attractive than small caps.
Nimesh sees quality growth stocks outperforming value stocks going forward – there are early signs already and he sees this trend growing in the coming months.
Nimesh highlights private sector banks, consumer discretionary and chemicals as examples of sectors which have lagged the market and which are ripe for both earnings growth as well as re-rating – he believes these will be outperformers in the months ahead.
Bajaj Finserv Flexicap Fund is currently 60% invested in large caps, 12% in midcaps and 26% in small caps. The fund follows megatrends theme of investing and is currently focusing on CRAMS driven pharma companies, high end consumer discretionary businesses, realty and home improvement sectors, chemicals, renewable energy, QSRs, power and MNC cap goods. Financials, IT and utilities are underweight in the fund.
The MF’s new Large & Midcap Fund has only a 30% overlap with its Flexicap Fund as this new fund focuses on quality businesses with strong moats – the compounders. The portfolio accordingly has many consumer focused businesses and private sector banks.
For investors wondering whether the market is getting overheated, Nimesh says their proprietary technical signals suggest continuation of the current bullish momentum rather than any imminent sharp sell-off.