Gaurav Sharma, smallcase manager
“Rate hike to my belief has never been a concern for the market,” Gaurav Sharma, smallcase manager and founder at GauravSir.in says in an interview to Moneycontrol.
After Q3 numbers by most companies, shares have not reacted to the volatility so one can say for now the price has factored in the current concerns, he adds.
Sharma, a practitioner of value investing, believes now there would be five triggers for the market, including jobs data, fall in the prices of commodities with improvised supply chains, and new alliances and dedollarization that may bring countries closer as they trade in their currencies, and each country may find a significant say in global politics.
Are we at the peak of the policy tightening cycle globally? Do you really feel a rate hike beyond 6.5 percent will dampen economic growth?
First, we have to understand what is the real cause of the rate hike.
Root cause is to discourage people from buying unnecessary stuff so that the rush for commodities, in the present day gap of supply chain and constraints from the Russia – Ukraine war, should be stopped.
So central banks know they are targeting the real problem in a way that a common man can understand.
I believe that because of this rate hike many investors park their surplus funds in equity, bonds or other saving options.
A rate hike above 6.5 percent pushes the potential buyers to defer their buying interests and this way nations can buy time to fill the gap of demand to supply.
After Adani Group stocks volatility, what is your great advice to investors?
A great advice to all times-
“Never put all your eggs in one basket”. So diversify the portfolio among sectors and commodities.
Consider booking partial profits in each rise and fill your portfolio with a concept such as Gulluck from our childhood.
Do you think the rate hike concerns are already discounted by the market? What could be the next triggers for the market?
Rate hike to my belief has never been a concern for the market as you can see because of rate hikes investors started parking their surplus funds in different investment alternatives and they have deferred their impulse buying decisions which are not solving their pressing problems.
As we can see the results of quarter three by most of the companies, shares have not reacted with volatility to results so we can say as for now the price digested the current concerns.
Now the next triggers for the market:
– Jobs data
– Fall of prices in commodities with improvised supply chains
– Global political factors as governments try to change the focus of the crowd from pressing problems in a diplomatic way
– Emergence of new nations with improved management of resources and government’s decisions for import quotas, import duties, export quotas and export duties
– New alliances and dedollarization which may bring countries closer together as they trade in their currencies and each country may find its significant say in global politics.
Even after the Budget, do you expect more announcements from the central government ahead of general elections next calendar year?
As far as my detailed analysis of Budget in which I have covered the maximum questions related to this budget, it is not just the proposed plan but it is a road map guiding vision to emerge as a nation, which is ready to lead the world and become a voice of many developing and underdeveloped economies. Like for an example to focus on export of shree ann or import duties cut on aeronautical parts, lab grown diamond machinery and components of electric vehicle.
So these are broad categories and I think that improvement has its space in the Budget as we have just heard that a committee will be formed to discuss GST on cement sector, which will eventually affect a series of infrastructure projects and hence growth.
Do you think China will report strong growth in the coming months?
The answer is yes. China never underestimates itself and never feels out but always gives space to other countries to feel what they want to feel. So instead of focusing on image building and political connections, it works on what is in demand and how can China make maximum business so they have taken time and planned well with many investors and the participation of developed nations.
Any thoughts on corporate earnings season gone by and management commentaries?
I have diversified portfolios in almost all sectors which may align with social, economic and political factors affecting the industries so I have strong inclinations to management commentaries and many of them shared the positive price to earning growth ratios so this varies from companies to companies. Like for an example the steel sector has shown its bottom and is declining and same way was the IT sector but we studied the change in volume and accumulated many quality stocks every week and now we are part of their turnaround.
Which are the themes to bet on for FY24?
This is a tricky one. I know what seems good for today will eventually change for tomorrow so instead of focusing for a year, try to focus on one week and start from a sector which is aligned to social, economic, and political factors. Review each week and slowly diversify so this is the journey of filling gulluck of stocks with real stocks at different levels.
Are you betting on life insurance companies after recent pressure?
I can give a very clear narrative to this question before this Budget most people take life insurance only to get deduction in paying taxes, but after this Budget all deductions have already been made and now is the time for investors to become mature and behave like an educated and informed investor asking companies what they get if they opt for their scheme.
This way quality will come out and we can identify real insurance companies differentiating with “me too brand”.
We are focusing on the insurance sector and trying to accumulate quality stocks.
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