INVESTING: Rishi Nathany
What is your view on companies in metal-related business? Experts are predicting that the demand is bound to fall hereon and there is surplus. I have holding in some companies. Should I exit and invest in other companies in infrastructure and media that have a better outlook?
The fortunes of the metal sector will hinge largely on how the global economic recovery pans out going forward. While there has been a marked improvement in demand for metals and performance of metal companies, these stocks are generally quite volatile. Since they have run up quite substantially in the recent past, they might be vulnerable to short-term corrections. However, metal stocks, especially those with captive mining resources could do very well in the long-term as the global economic recovery gathers pace.
How badly will the 3G auction and new mergers and acquisition norms affect telecom stocks? After the recent event, some telecom stocks plummeted to their 52-week low. I am keen to invest in them as I think there are no fundamental reasons for the stocks to fall this low. What do you suggest?
The telecom sector has been plagued with intense competition and falling margins. The 3G-auction bids have far exceeded the initial estimates.
While this is good for the government, telecom companies will have to cough up large sums of money to pay for these licenses, which will put more pressure on their balance sheets as they might have to raise more debt to fund the payments. While telecom stocks have fallen substantially, we would like to avoid them for the time being.
I was planning to invest in index stocks. However, I have read that our valuations are currently high. Should I wait for some correction before investing?
It is time in the market which is more important than timing the market. You have not mentioned which index constituents you plan on buying. While the markets seem fairly valued at present, there are still quite a few fundamental value buys available, which could provide decent possible upsides.
Do you think the prediction of good monsoons and lower agri-input prices makes FMCG companies a good bet in the current market?
The entire Indian economy and the stock markets would be expected to do very well in case we have good monsoons this year. Most FMCG as well as agri-related stocks could do well as a result. However, investing should be done from a long-term perspective and not as bet on an expected event that may or may not materilise.
The writer is director, Touchstone Wealth. He and his clients may have exposure to the sectors discussed in this column. Send your queries at yourmoney@bsmail.in