Highlights
- Stay cautious, hold cash, and stagger investments amid volatility and global uncertainty.
- Financials may rebound if tensions ease; downgrades likely if crisis prolongs.
- MSMEs face highest risk; flexi-cap strategy preferred; selective opportunities in IT, pharma.
Amid rising global uncertainty and market volatility, Mihir Vora, Chief Investment Officer, TRUST Mutual Fund, in an exclusive interview with ET Now, advises investors to stay cautious and avoid aggressive moves. With multiple global triggers in play, he suggests waiting for better opportunities while keeping cash ready. Financials may bounce back if tensions ease, while IT and pharma offer selective opportunities. Here’s a complete breakdown of strategies, sectors and risks ahead.
Cash is King
Vora emphasises keeping dry powder and cash ready, as he anticipates brilliant opportunities to invest in the next few weeks due to sharp corrections in stock valuations.
“You will get a chance to take a long-term view sooner rather than later. That’s when anyone with dry powder and cash will be keen to invest. I think in the next few weeks we will get one of the most attractive opportunities to invest, but I would not deploy all capital at once. It is better to stagger investments based on the news flow and market levels,” Vora added.
Financials Strategy
Vora stated that if the current crisis resolves quickly, financials should bounce back and lead the market. However, if tensions prolong, there could be lasting damage to the sector, he said.
He said, “some downgrades are likely to happen. The good thing is that the December quarter numbers, if you remove the impact of the labour code, have been quite decent. As we have been discussing, there were green shoots in the economy even before the whole Middle East situation escalated.”
“The economy was on a cyclical uptick. However, this development, even if it is now in its third or fourth week, is a negative. You might see some downgrades after the March quarter results, though not too many. As I said, expectations will start deteriorating if this situation prolongs. A timely and early resolution of this crisis is in our best interest,” Vora said.
Where is the pain?
Vora said, “the first pain, if this situation elongates, will be seen in MSMEs, small businesses and the retail segment, as that is where the holding power or resilience is the weakest.”
“If it continues, you might then see medium, small-scale and even larger units getting impacted. The bottom of the pyramid is where maximum stress is likely to occur if this lasts for a longer period. Otherwise, as of now, I don’t see too much of an issue in midcaps or listed companies, whether small, mid or large. However, in the unlisted space, particularly MSMEs and the retail segment, that’s where issues can arise,” he explained
“There could also be challenges related to fertilizer procurement, meaning some second-order effects may be felt in the farming segment. So, there are many moving parts that need to be considered,” Vora stated.
Market Approach
Vora recommends a flexi-cap approach for investors, allowing fund managers to adjust allocations quickly in volatile markets.
“When markets are moving so quickly, both on the upside and downside, strategic asset allocation cannot be changed too frequently at the investor level, whereas a fund manager can do so in a multicap or flexi-cap category. So, I think that remains my core category — the multicap or flexi-cap space,” he said.
Sector Outlook
While generally underweight on IT, he notes the sector might be relatively attractive for bottom-fishing after recent sharp corrections. Pharma offers selective opportunities, particularly in ancillaries related to new diabetic drugs, Vora said.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
