Jinesh Gopani of Axis Mutual Fund says given the demand destruction and slowdown seen in the economy, one must be very slow and cautious in stock picking. Excerpts from an interview with ETNOW.
ET Now: Investor confidence is at the lowest level in the market considering the mood is so sour. Would you say this is the kind of scepticism which should be made use of by long-term investors? And is this the right time for bargain hunting or value investing?
Jinesh Gopani: Fundamentally, the economy is still slow. To that extent, doing bargain hunting always calls for patience. If you are a long-term investor with a three- to five-year view, then obviously some stocks will become attractive at some prices. But given the demand destruction we have seen and the slowdown we are seeing in the economy, we have to be slow and be a little cautious rather than going all out.
ET Now: Data suggests an alarming slowdown: stock market going down by 10-15%, Yes Bank share prices stumbling down to Rs 100 or crisis-hit DHFL seeing a 95% drop. Do you think the slowdown that grips the Indian economy could get any worse?
Jinesh Gopani: It all depends on individual stocks, as we can see in midcaps and smallcaps, some of the poorly governed companies are already down. The trade slowdown is already at a worse time for investors. But if you see the broader market, good quality companies and well-governed companies are holding on. Overall I would say there are diverse views on the market dynamics. Tier-I companies, well-governed business will continue to do well and are holding on, money is flowing in there. But there are sharp corrections wherever there is an inch of distress or trust deficit. On the whole, the market is very volatile and one has to be very-very careful given the cleaning up of the system happening now.
ET Now: Are you saying that the economy can run on a single engine or market could slow down to a crawl by the end of the year? Do you think the market will be limited to not even 50 but 40 companies, because that is what everybody is doing?
Jinesh Gopani: The problem really is, in a sector you do not have 10, 15 or 20 companies thriving, growing and giving you those growth opportunities.
When macro is slow, it impacts the sector, and if you are not a leader in that sector, or if you are not able to navigate those sectoral dynamics well, then there is a problem. At this juncture we have very few companies delivering growth and which are able to navigate the difficult phases. It is a very filtered market, and as I said, it is a difficult period for investors. We have to be cautious. We have to ensure that stocks we are buying, at least in our portfolio are good enough to withstand the slowdown that is threatening to get worse.
ET Now: Within the consumption space, where are you investing, or is the strategy to move out completely and look for better opportunities elsewhere?
Jinesh Gopani: From Read More – Source
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