In conversation with Sheetal Agarwal of IIFL; Jiten Parmar, Smallcase Manager and Co-Founder, Aurum Capital talks about market valuations, top themes to look at and the ones investors should stay away from.
2022 has been quite challenging for Indian markets. What should investors do and how do you see this market moving from here on?
The one thing investors must definitely do is to NOT PANIC. Bull and bear markets are part of investing. One must understand that in the long run Indian equity markets will go up. The trick is to bide out these tough times understanding that this is how market cycles work. In fact, investments made in these times create huge wealth for investors, and not the investments done in bull and euphoric markets. One must improve the behavioral aspects in investing. That is the X factor of investing. At the same time, do ensure that you have tennis balls in your portfolio, and not eggs.
Do you think current valuations offer an attractive entry point?
Yes, we believe valuations are attractive in quite a few sectors and stocks.
What are the themes and sectors you prefer?
The sectors which look interesting after the current fall are metals/mining, cement, infra, capital goods, telecom, real estate, specialty chemicals, paper, hotels, financials.
What are the themes and sectors you are bearish on?
We believe the newly listed platform companies, many consumer and FMCG companies, select IT companies, the highly valued quality companies may underperform.
Which are the emerging sunrise themes you like?
We generally like sectors which are out of favor and offer value. We are value investors. We would love to invest in renewables space, EV space, platform companies. If we can identify the winners and if they are available at reasonable valuations.
What are the red flags investors should watch out for?
Don't invest in stories. Don't buy at any price. Always look at valuations. The Buy At Any Price is not a all-weather theme. It can only perform for some periods and for the rest it will underperform. Be sure you are not inflicted with FOMO (Fear Of Missing Out). And never have Loss Aversion. If the thesis goes wrong, don't hesitate to sell, even if at a loss.
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