Is it time for people to tilt towards the deep value stocks like power, PSUs, coal?
We are in the middle of a classic bull market and we are seeing rotation of sectors and whatever is happening globally, I do not think will have a material impact on our earnings. Given the liquidity flows, this kind of a bull market may sustain for many years.
In such a scenario, looking at how past bull markets have actually played out, if investors just wait and sit on good quality stocks and not try and chase every winning stock for that day or that month, they may be better off.
From time to time, we are seeing new investment themes attracting a lot of investor money and they are moving up as well. So rather than chasing momentum, if they focus on good fundamentally sound stocks, eventually those will also start doing very well. Most importantly, they should avoid getting drawn into deteriorating the quality of their portfolio by buying bad quality stocks. That is one thing to keep track of and also not to leverage and over trade.
After getting beaten down for the last two odd months, , M&M etc are making a comeback. Are you convinced about auto considering the semiconductor chip shortage, the EV disruption and, of course, the raw material cost pressure?
We are also seeing rotation of sectors and laggard sectors are now coming into play. Investors are looking forward to good monthly figures coming from this point on considering that a lot of the lockdown issues are over and done with.
We are seeing a very high degree of normalcy return into the economy and consumption spend. From that point of view, the next few months will appear to be very strong for auto sales, especially when one looks at the earlier base month.
At the same time, each company is dealing with its semiconductor shortages and that has more or less been factored or priced in. But the real threat for the sector in the medium to long term has to be the disruption to be caused by electric vehicles. Competition is coming from start-ups which are well funded and prepared to take on huge losses. I will be a bit skeptical on auto sector.
