Indian benchmarks have rallied despite muted economic forecasts, with most investments toward larger companies. Valuations are higher than reasonable, once again. But this, according to Sushant Bhansali, isn’t the time to have a low equity allocation.
Instead, it’s a good time to remain invested in the market as the masses are only going through a “fear psychosis” amid the Covid-19 pandemic, said the chief executive officer at Ambit Asset Management. While some companies will regain normalised earnings by financial year 2022-23, without severe damage till then, others will reach normalisation as soon as FY22, he told BloombergQuint in an interview. “There will be some winners in FY22 which will use this as an opportunity and make the most of it.”
Bhansali is betting on market leaders in various sectors, irrespective of whether they are large, mid or small caps, outlining a strategy being adopted by several market veterans. Market share of leaders will grow disproportionately over the next two years, more so in fragmented sectors where organised players will gain from unorganised players, he said. “Even if the sector is not doing well, these companies will gain market share and show growth.”
Once the “fear psychosis” dissipates with the availability of a reliable vaccine or medicines, sectoral tailwinds will boost growth for these companies, he said citing examples of building materials and paintmakers.
Bhansali also expects entry-level scooters, two-wheelers and cars to do well because of the need for personal mobility. But shared mobility may come back in vogue once the fear subsides, he said.
Watch the full conversation here:
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