This correction was unexpectedly sharp and happened in a benign macro environment – a reminder that Mr. Market will always teach you something new everyday if you remain humble and nimble enough to keep learning.
Ajay has held his key positions through the correction as his team’s research and channel checks continue to confirm healthy earnings growth outlook for these stocks.
Management discussions suggest to Ajay that recovery will be relatively slow in the manufacturing/infrastructure space, a bit quicker in urban consumption space and already growing well in the rural consumption theme.
He expects beaten down lenders to rebound as RBI moves to relax restrictions and expects the overall consumption theme to outperform manufacturing in the coming quarters.
Motilal Oswal ELSS Tax Saver Fund continues to perform well across short, medium and long term horizons despite taking a knock in the recent correction as the fund’s high conviction growth oriented bets continue to drive alpha on the back of superior earnings growth.
Ajay is mindful of the fact that markets post correction will likely have less patience for growth stories whose valuations are being justified by 5 yr out earnings rather than next year’s. He says he will remain nimble and open to reviewing some of his positions, in light of this reality.