“I think if not at the fag end, but now one needs to be careful as to what they are getting into. One needs to be very selective,” Chowhan said.
He said the heavy flow of liquidity into IPOs has also contributed to large-cap stocks underperforming. With more capital already deployed, demand for new issues could weaken, prompting companies to delay their offerings and reducing the supply of IPOs. Chowhan expects the broad-based listing gains seen over the past month and a half to become harder to achieve.
Chowhan remains positive on the liquor sector, where consumers are increasingly moving towards premium products. He expects new liquor policies in southern states over the next few months to unlock working capital that has been stuck with companies, benefiting the sector as a whole.
While valuations are no longer cheap, he sees room for domestic players in the mid-premium segment. Multinational companies are largely focused on premium products, leaving a sizeable market where local players can gain share.
Abakkus remains positive on metals but is not looking to increase its exposure, which is currently in the high single digits. The portfolio has added more aluminium and steel plays, with Chowhan pointing to improving Chinese demand and raw-material cost inflation as factors supporting metal prices.
“Overall, from a medium-term perspective, we continue to stay positive because demand, Chinese demand specifically, is kind of picking up,” he said.
Chowhan is also positive on the wires and cables sector despite UltraTech’s entry. He does not expect the move to cause the kind of disruption seen in the paint industry when a new player entered the market.He said demand is currently ahead of supply and should remain robust over the next two to three years, supported by renewable energy, electric vehicles and continued spending on power infrastructure.
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Rising copper prices are another near-term positive, according to Chowhan. Higher copper prices can result in inventory gains, while strong demand allows companies to pass on the increase, supporting both revenue and margins.
“So overall, staying invested, looking forward for positive returns here,” Chowhan said.
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