In the near term or the interim period, would you stay away from the entire reopen trade because everything from hotels to multiplexes to a Delta Corp it is getting challenged and most of these stocks are taking a fair amount of beating?
The reopening trade has been volatile and would possibly remain so. Across Asia, there are some stocks that we have played and we have been playing but many of them have a very strong domestic leg and some of the travel agencies cater to north Asian economies or China and Thailand as well. But in the case of India, we have not really played any of those reopening trades.
I think the reopening trades which are entirely dependent on international travel would continue to be volatile and it may not be the right time to dip fingers into them. If there are reopening trades available which depend entirely on domestic tourism, domestic travel and the domestic economy, those might be fit for some degree of bottom fishing right now. But in the case of India, we have not really ventured into that area.
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Would you also avoid some globally linked sectors like metals in the near term?
We have a slightly different point of view about metals because in the short term, the base metal prices would be weaker than they have been in 2021, over the next one or two quarters or so, partly because there is a degree of pressure from China to curtail the commodity prices in general.
We have seen that in the resource price universe, particularly coal, and it in a smaller way in copper and aluminium. But over the longer term, if someone is focussing on second half of 2022 or beyond, then metal prices could revive and that is partly because of the global demand boom in the developed markets, in particular that we are continuing to see. Additional capacity in these sectors take much longer than the revival of demand.
So there is a bit of a kind of a time horizon play here. If an investor is short term focussed he may want to stay away from that universe, but over the next one to three year timeframe, there are stocks within that universe that may make sense, particularly those which are underleveraged.
