Santosh Joseph, Founder and Managing Partner at Germinate Investor Services LLP thinks it’s better to be cautious since the market is at record levels.
Some moderate level exposure and then staggering over time is probably a better option to play this market than being on the extremes of fully in or fully out of this market action, he said in an interview to Moneycontrol’s Sunil Shankar Matkar.
He believes the consumption theme should be the most sought after due to the gradual economic revival and aided by massive vaccination drive .
Santosh is a financial services professional with over 17 years experience in asset management, banking and insurance.
Edited Excerpts:-
Q: Market is at a record high and the recent dovish US Fed stance lifted the sentiment further. Is the rally sustainable from here on to add another 10-15 percent on the benchmark indices by FY22-end?
Yes, markets are at record high and they have been this way for weeks now. The party seems to be unending. As far as sustainability of the markets are concerned, this bout of up trending volatility has been welcomed with lots of cheer. We must remember that what went down, will come up and what’s gone up has to come down at some time. At these levels and activity in the markets, a 10-15 percent upside or downside isn’t surprising.
Q: Is it the time to be cautious and wait on the sidelines for correction or should one keep buying in the hope that the rally can continue going ahead?
I think it’s better to be cautious since we are at record levels. In the sense, waiting or investing is very specific to individual investment ideas and how one goes about entering at these levels.
Some moderate level exposure and then staggering over time is probably a better option to play this market than being on the extremes of fully in or fully out of this market action.
Q: Can you name the sectors where you have a bullish view and why?
We have already seen cyclical sectors bounce back sharply over the past few months, there are still many beaten down sectors that seem attractive both in relative and absolute terms even at these levels.
The consumption themes led by gradual economic revival, aided by massive vaccination drives should be the most sought after.
Q: What is your investment mantra for stock/sector selection?
It’s simple old school wisdom of high quality and low activity investing. Investment is actually a very boring exercise, you pick something you understand well, with the conviction that it has the potential to grow and then let it grow. It’s simple old school wisdom of high quality and low activity investing.
Q: What are the great lessons you have learned from Mr Market in your journey of the stock market?
Risk is both ways, can be over exposed or under exposed. Sometimes the biggest risk we take is not taking a risk. Sometimes, risky bets pay off well, but a bet not taken won’t pay you. Likewise, the size of your investment greatly matters. However good an idea, it’s always a winning formula to be diversified.
Q: What is your advise to new age investors who have been pumping money in the equity market in the absence of FIIs?
Don’t get carried away. This is a tide in which every new entrant feels like a winner.
It’s good to consider equities for savings and wealth creation. But Markets are not always a one-way street, don’t let the 2-way journey kick you out of the markets. Tread prudently!
Q: Banks have not participated in the current rally that lifted the market to record highs. What is the reason behind it and when do you expect major participation from banks?
Banks have been at the forefront of a sell off last year and laggard as far as their contribution is concerned in the rally up. Consolidation will happen, not all will fire up. Select few will contribute and take the sector forward.
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