Avendus Capital#39;s Andrew Holland still betting on largecaps
The Reserve Bank of India (RBI) has contributed more towards the revival of the flagging Indian economy than the government, but it will be some time before the pick up in demand can be seen, Andrew Holland, CEO of Avendus Capital Alternate Strategies, told CNBC-TV18 in an interview.
“I would rather stick to the best in class companies in each of the sectors and those are going to be the largecaps because whilst the budget was okay, the RBI did the heavy lifting to help the economy in a very short-term. The litmus test of all of these is going to be between now and end of March to see if demand is really picking up and the measures that both the governments in particular the RBI is starting to bear some fruit,” he said.
The state of fiscal deficit in India has precluded the government’s efforts in reviving the economy in the short-term, Holland added. “Given the fiscal deficit of the government, it will be very difficult for them to get things moving in short-term. So the jury is out now, to my mind, till the end of March, but because of the virus in China, a lot of sentiment between now and middle of March will also play from global perspective.
“I am not trying to be overly negative here but there are a few things out there which were taken for granted which I am not sure I can give any evidence that anything has picked up. I don’t think. It’s only a week since the Budget and RBI (monetary policy announcement for February), but we were banking that it’s going to work. However, channel checks we are getting at the moment (are) saying nothing has moved. So let’s give it a month but if not, then we get back to the sentiment perhaps we were last September before the corporate tax cut.”
On his investment stratagem, Holland said: “The longs will be in quality companies and on the shorts; it’s very rotational because we get squeezed quickly on the short side but there are certain companies and sectors which will continue to underperform.
“Pharma we became more constructive about 6 months ago. We think the sector still has a few problems there but we think it’s all in the price now. So we would look to adding pharma but you have to be aware of what is happening globally at the moment to that to play through but we are constructive.
“On IT, probably more neutral. Obviously it’s a place to hide when markets are more volatile but there is nothing that excites me to say, I have got to go into largecap IT. If anything there might be some more interesting stories in the midcaps and that’s something that we are looking at more,” Holland further added.
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