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'Equity investors should pare return expectations'

The Russia-Ukraine standoff is keeping investors on their toes. Business Standard's Puneet Wadhwa caught up with R Venkataraman, chairman, IIFL Securities to know if the markets' bottom is near

Topics
Equity markets | Ukraine | Investment strategies

Puneet Wadhwa  |  New Delhi 

Q: Do you think that the global financial markets, including India, have overreacted to the likelihood of the US Fed's rate hike and the geopolitical situation with Ans: > tend to overreact on both sides – to the good as well as bad news >US Fed rate hike impacts global flows, especially the emerging markets > issue is like going back to the ‘cold war’ days > dealing with too many headwinds and are nervous >Seeing a healthy correction after a secular rally since March 2020 Q: Do you see more correction or are we close to bottoming out? Ans: >FII selling is being balanced by domestic institutions buying >Key positives: Good budget, Capex spend > yet to digest higher inflation possibility >Rally will resume once there is clarity on earnings impact >Market outlook: Subdued in the short-term; will pick up post Q1FY23 numbers of India Inc. Q: Where do you see leadership emerge if the markets are to sustain and even move up from the current levels? Ans: >Information technology >Banking & financial services (BFSI) >Capex-related plays Q: Are the sore points? Ans: >FMCG valuations are high; likely to underperform Q: How big a dent can rising fuel prices and inflation cause in fiscal 2022-23 (FY23) earnings of India Inc? Ans: >Auto fuel prices have been constant due to impending state elections Q: How do you think are the retail investors looking at these developments? Are they cautious now before putting in their money? >Retail investors have matured; investing via mutual funds (SIPs) Q: What has been your investment strategy? Ans: >Suggest looking at shorter-end of the cycle; fixed tenure products >Equity investors should pare return expectations, but remain invested Q: Your portfolio strategy? Ans: >Investors should not stay in cash >Not too much overweight on equities now >Investors should wait for better opportunities to enter the market Q: Do you think the LIC IPO can be a threat to the secondary market liquidity? Ans: >Markets will be able to absorb the IPO >Liquidity will get back to normal in a month’s time post the IPO Q: A number of new-age companies that listed recently have seen their stock price crash in the recent market correction.

Have the retail investors learnt a lesson that they need to look at the fundamentals of the company, earnings outlook and not to invest purely based on the hype surrounding the IPO? Ans: >Investors got caught on the wrong foot seeing the listing gains for some issues >Investors a disappointed lot now >Fintech valuations have shrunk in India and globally >Investing in these stocks is not advisable at the current levels

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First Published: Tue, February 22 2022. 08:00 IST
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