Alpha Moguls | Ravi Dharamshi Says It’s Wise To Stay Invested Despite A Possible Drawdown

All investing ideas, big or small, need a favourable push. Ravi Dharamshi, a value investor known for his small- and mid-cap bets, thinks the market is in that structural upmove.

There could be a drawdown sometime over the next six to nine months, Dharamshi, founder and managing director of ValueQuest, told BloombergQuint on the latest episode of Alpha Moguls special series. He would use that downtick as an opportunity to invest afresh, other things remaining the same. The reasons for the correction could well be global, for there are initial signs of liquidity abating in the U.S. Other regions could well compensate for it, he said.

Many investors see the price-to-earnings rerating story coming to an end, if not already. Dharamshi doesn’t agree.

While Dharamshi agrees that there is a risk of stretched valuations in well-discovered names, only one or two sectors are frothy. There would be a scare if valuations hit the sky in a high-earnings scenario, he said. Since an earnings pick-up is around, he isn’t worried about a steep and a long-lasting correction. That’s why his portfolio is positioned to take advantage of an earnings revival.

ValueQuest's pet themes are financial inclusion, financialisation of the Indian middle class and select consumer plays. Dharamshi has invested in retail and other consumption themes. A select small finance banks can create significant wealth over the medium term, he said.

And his investments draw from the wisdom in the book 'Reminiscences Of A Stock Operator', a fictional account of the life of a trader. It’s one of his favourites and he learns something new every time he reads, Dharamshi said.

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