As the market pauses for breath before the next leg up, Anand says investors should use this opportunity to move out from narrower thematic and cap-size related funds to more broad-based funds like flexicap and multicap funds.
This is the time to consolidate your portfolio down from several NFOs you subscribed to, into a few good funds where managers have broader mandates to navigate markets on your behalf.
He has asked his equity team also to consolidate their portfolios – increase allocations to higher conviction names and start nibbling into target list stocks that have now come into buy zone in this correction.
He is not worried about the earnings slowdown getting entrenched into something deeper. A series of one-offs impacted Sep quarterly earnings – he expects a bounce back in 2HY.
He sees merit in the structural argument that as India’s GDP re-balances with manufacturing coming back after couple of decades, institutional holdings will also start reflecting this trend – which can pose some long term challenges to banks holding their dominant position in market indices. However, that does not rule out a short to medium term trade in banks on valuation differentials.
He does not agree that value is giving way to quality and that markets will narrow as a consequence. Quality has been wrongly branded as only consistent compounders – he believes there are quality cyclicals and quality consistent compounders – both of which will continue to do well as the market moves forward.