Investment portfolio: For long-term investors, best opportunity to rearrange the portfolio: Pankaj Murarka


“If somebody’s sitting on silver it’s a really good time to go out and build your portfolio probably with a three to five year perspective and given the volatility one would just want to build it over a period of time. months rather than trying to do it all in one day, says Pankaj MurarkaCIO, Renaissance Investment Managers Limited.

If I say everyone got a haircut, that really applies to you and me!
Absolutely. We have a day when we see absolute capitulation in the midcap and smallcap space. But I want to point out that we had an environment late last year, early this year, where a lot of these IPOs were mispriced and an IPO bubble played out in India. Losing or profitable companies went public at outlandish prices and that’s where the market did its job in terms of re-pricing those assets or bringing them closer to fair value.

Considering that the appetite to buy stocks is limited, would you switch, sit still, or just change your strategy?
With liquidations like this happening every few years essentially for a long-only investor, it’s time to review the portfolio and examine each of the beneficiary companies and the underlying investment hypothesis. Obviously, this is an opportunity to change companies in terms of some of the underperforming companies or companies whose fundamentals have probably weakened or are likely to be constrained due to the headwinds of the economy. economy and likely move to companies with superior fundamentals that are likely to have tailwinds in the next growth cycle.

So my view is that for a long time only investors who generally don’t hold too much cash, these kinds of sell-offs and sell-offs are just an opportunity to rebalance your portfolios and improve the quality of your portfolio so that ‘as the market stabilizes, you cam get next the move to try and capture a much better performance.

In the fall of 2020, you identified names like . Are we reaching the point where you think there are hidden gems, a value buzzer emerging?
I think so. When we look at a lot of these companies from the absolute price level, we see that the price levels have become attractive, but the only point is when you have sales like this and the capitulation plays out and that at the top it is driven by global volatility, it is very difficult to pick absolute bottoms on equities.

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In an environment like this, value can get deeper or cheap can get even cheaper, but I still believe that for investors with a medium-term perspective, now is definitely the time to get out and invest. If someone is sitting on silver it’s a really good time to get out there and build your portfolio probably with a three to five year perspective and given the volatility one would just want to build it over a period of a few months rather than trying to do it all in one day. But yes, there are definitely pockets of value that have started to emerge in the markets.

What will be the turn of this market? Where would you say the worst is behind us? Could it be raw, could it be valuations, could it be something from the Fed?
Given the sell-off we’ve seen, valuations have already moderated in the Indian context and also in the global context. What we really witnessed was probably early this year when a recession in the United States was certainly not the base case, given the inflation numbers we saw in over the past two months, the markets are trying to assess it as a base case and its effect on equities and global growth.

The fact is that even in a recessionary environment in the United States. I am reasonably confident that India’s growth will remain reasonably resilient and that we will be much less affected than many other parts of the world. From India’s perspective, two things that would really matter or matter to call the bottom of the market; one is clearly crude because it’s a big macro trade for India because the fact is our crude import bill is around 3.5% of GDP. This has a significant impact and the fact is that crude prices have risen almost $40 since the start of the year.

So if a 20-30% drop in crude prices were to occur either because of a ceasefire or fears of a downturn, that would be a very big macro positive and would have a significant impact in terms of improving macroeconomic fundamentals for India as a whole.

Beyond that, at some point, globally, we will be close to peak inflation. Once we get some inflation data for a few months showing that inflation is coming down month on month, all this fear that inflation is picking up or sticking to the higher levels goes away. will ease and it will also give the US Fed some breathing room. These are the two things I would want to watch from an event or data point perspective before taking a call in the markets.

Tell me about your three main holdings?
We remain invested in large private sector banks, in particular

and . We also have a stake and they have been there for quite a long time now. Other than that, we are positive on consumer discretionary as a space as we believe consumer spending is strong and will continue to be so. So we continue to hold stocks like Aditya Birla Fashions on the consumer discretionary side.

Apart from that, we also have a positive bias on India’s investment cycle. We own capital equipment as an industry and within that industry we own ownership of names like L&T, Cummins and

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