D-Street should learn to deal with trade issues: S Krishna Kumar, Sundaram MF
S Krishna Kumar, CIO-equity at Sundaram Mutual Fund, spoke to CNBC-TV18 about market fundamentals and quarterly earnings of FMCG stocks.
“One should not get too much worried about the near-term volatility but rather focus on the bigger picture and how in the next three years the Indian economy can make to higher growth trajectory and what the new government would bring in terms of policy action, fiscal action. The RBI monetary stance is also likely to get soft given the inflation data,” said Kumar.
“So between the broader markets and the largecaps, one needs to be looking at a balanced approach to investing and not choose between largecaps and midcaps,” said Kumar.
On the US-China trade war worries, Kumar said: “The market should learn to deal with these trade issues than getting worried about it. From India perspective, we are too small to have linkage from the trade perspective and in fact, would be beneficiary of US-China trade war. However, near-term political expectations would drive market positioning.”
With regards to earnings from the consumer goods companies, he said: “It was expected that the topline growth would be soft, as well as pressure on margins. So the numbers are broadly in-line with expectations. Valuations in the space are already high and offer little scope for expansion. This could continue to be the trend and people would take off money from the space. So we have been underweight space.”
Talking about the selloff in auto stocks, he said: “The companies have a strong balance sheet, high free cash flow generation, expect Tata Motors. Fundamentally, would look at these companies more positively and use slowdown in these sectors to add up more over the next three months.”