Q&A: Vinay Khattar, Head-Research, WAIS, Edelweiss

'Look out for turnaround stories in mid, small caps'

In the last interview you spoke of mid-caps being value buys across sectors in February. Do you still prefer mid-caps over large-caps?
Yes, we continue to like mid-cap themes due to their strong growth and attractive valuation. We believe, we can continue looking at mid/small cap companies which are growth/turnaround stories.

During the season 2, you have frequently revamped your portfolio. What made you do so?
We have divided the portfolio based on short-term/quick opportunities and on long-term investments. Only a small part of the portfolio was churned regularly while most of the stocks were kept the same. Quick themes we played were tea, consumer durables, power allied, airlines, agri, among others.

What stocks/sectors would you recommend for short- medium-term investment?
We continue to remain bullish on India’s consumption story which includes agriculture, consumer durables, auto and banking.

Given that we are in the rate tightening cycle, how do you see the rate sensitives’ faring?
Current rates despite tightening are at relatively low levels. In addition, strong demand has led to higher growth trajectory for the industry which indicates that till the tightening does not become aggressive the economy and the markets will not react negatively. With expectation of the tight liquidity scenario likely, the growth trajectory should continue.

World markets seemed to have stabilised to an extent. Do you agree, and will India continue to out-perform others?
The world markets have stabilised post Greece debacle. The current scenario panning out in Europe indicates the current bad phase is behind us. Recently, Spain was also able to raise $3.85 billion debt at 5.116 per cent with demand for the bonds more than doubled the amount on offer.

However the sustainability of the recovery especially in US looks challenged with expectation of GDP growth coming down to 3 per cent from 3.2 per cent, Consumer confidence Index also slackening to 76.5 from 85.6 levels. US may well be headed for deflation though the call may be still some time away.

China also shows easing in steel production, demand for Ores as well PMI getting reported at lower levels of 51.2 vs 52.1 in July. It may be a bit early to say the problems have been solved permanently.

Having said that I think India is batting on a good wicket and should continue to do well predominantly lead by significant traction in infrastructure sector as well as strong consumer demand.

Finally, as we come to the end of Smart Portfolios could you please share your experience and advice to our readers?
Thank you for providing us with the opportunity to share our product capabilities and our investment advisory experience on this platform to a large audience. My advice would be to go for value or growth buys in the likely themes.
 

Vinay Khattar, Head — Research of WAIS, Edelweiss
Top Holdings	% of assets	Cost price (Rs)	Current  price (Rs)	Value (Rs lakh)
McLeod Russel	10.05	224.23	251.95	1.26
Havells India	8.85	683.68	693.75	1.11
Hindalco	8.56	155.92	165.20	1.07
Motherson Sumi	8.32	162.75	173.80	1.04
Idea Cellular	8.21	69.74	71.00	1.03
Total investments	97.02			12.16
Cash	2.98			0.37
Net worth				12.54

Returns (%)25.37     

Ajay Parmar, Head Research Institutional Equities, Emkay
Top Holdings	% of assets	Cost price (Rs)	Current  price (Rs)	Value (Rs lakh)
Torrent Pharm	9.21	554.18	560.10	1.29
Lupin	5.40	1510.25	1887.90	0.76
Rallis India	5.38	735.26	1253.95	0.75
Greaves Cotton	5.13	371.95	358.65	0.72
eClerx	5.12	384.67	477.60	0.72
Total investments	97.00			13.57
Cash	3.00			0.42
Net worth				13.99
Returns (%)	39.86

 

Amar Ambani, Vice-President (Research), IIFL
Top Holdings	% of assets	Cost price (Rs)	Current  price (Rs)	Value (Rs lakh)
BF Utilities	4.62	709.95	974.15	0.68
Motherson Sumi	3.53	153.20	173.80	0.52
VIP Inds	3.52	319.20