ADVERTISEMENT

AlfAccurate Advisors' Key India Stock Market Investment Themes

Rajesh Kothari of AlfAccurate Advisors on how money can be made even during market downturns.

<div class="paragraphs"><p>Pedestrians walk past an electronic ticker board at the Bombay Stock Exchange. (Photographer: Dhiraj Singh/Bloomberg)</p></div><div class="paragraphs"><h4><strong>Topics</strong></h4></div>
Pedestrians walk past an electronic ticker board at the Bombay Stock Exchange. (Photographer: Dhiraj Singh/Bloomberg)

Topics

Don't be scared of drawdowns in the stock market and, instead, look for the right opportunities.

That's according to Rajesh Kothari, managing director of AlfAccurate Advisors Pvt. that manages assets worth Rs 1,200 crore. Corrections are part of any bull market, and it won’t be different this time around, he said. A balanced approach will help generate returns, he said.

"In the last 21 years, if investors had put money into the market during the downturns, they'd have made 9-18% compounded returns over that period," he told BloombergQuint’s Niraj Shah in an interview, citing data compiled by the investment advisory firm.

Kothari said equities are important for asset allocation and will continue to deliver returns for the next two-five years. Earnings growth is going to be "very strong and return on equity will improve in 2022", he said.

"A combination of the two factors will help the market to deliver returns despite the possible volatility, correction and downturn."

Chase Market Share Leaders

High-quality consumer-related growth stocks are going to do well in 2022, he said, citing companies like Trent Ltd. and Asian Paints Ltd. Kothari also suggest quality cyclical stocks, like private banks, finance, automobile and auto ancillary firms that are likely to benefit in upcoming capex revival.

"In a portfolio, you need to have companies that are going to have earnings growth higher than the country’s GDP growth," he said. "A lot of market leaders are in such a sweet spot that every crisis has resulted in them gaining market share. Investing in such companies will help in wealth creation and also offer capital protection."

Top Themes For AlfAccurate Advisors

  • Specialty chemicals: Runway of growth for long. Some companies may see 20-40% annualised earnings growth. China Plus One strategy, huge capital expenditure, new capacities strong visibility, and new clientele are the key things working for the sector.

  • OEMs and auto ancillaries: Automakers will benefit from the domestic as well as global recovery in demand for commercial vehicles. Domestic CV recovery is expected from this quarter, global CV market will also do much better as the semiconductor shortage reduces. Auto ancillaries will also benefit from new trends like electric vehicles as will demand recovery in the overall industry.

  • Two-wheeler segment: Cannot ignore the top three to four large two-wheeler firms as they have a large profit and cash pool, along with a deep distribution network and very strong brand power. Compelling valuations and the presumptive ability to match EV manufacturing give an opportunity to buy into the space.

  • Telecom companies: Can generate returns on the top one or two companies as average revenue per user is still low. Valuations remain reasonable looking from the lower end of the ARPU spectrum.

Watch the full interview here: