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Sadanand spent over the last two decade with SG Securities , Newscorp and Kotak Group in core areas of research and investment management. He has been with Taurus Asset Management for the last two years and 10 months.
1. Last few weeks have been rough for the market. What is your near-term view of the market?
Ans. The recent worries about stability of the government have raised the risk quotient of the market and Govt ability to sustain the reform measures. Market will look for cue to stability of the government to continue with the reform measure that is spearheaded by the FM and his team. This should cause volatility in the market in shorter term. We believe this will open also open up fantastic opportunity across many sectors and midcaps to build and re-align the portfolio
2. According to you, which sectors offer better risk-return opportunities at current levels?
Ans. Banking and Financial Services, Oil and Gas, IT and Capital Goods will stand out as better risk rewards for next many quarters . We believe many absolute mid cap ideas to deliver substantial return over the next few years.
3. Could you shed some light on the investment strategy followed for Taurus Starshare? What kind of investors should look at investing here?
Ans. Taurus Starshare is multi-cap portfolio with the flexibility of moving across large caps and mid caps composition. Portfolio generally biased towards large cap and changes its composition of mid cap depending upon underlying economic cycle. Our current portfolio strategy is oriented towards potential outperforming sectors and stocks. We have built our portfolios across BFSI, Oil and Gas, IT and Capital goods. We also have many absolute mid cap bottom up ideas that we think will emerge as large outperformer. We also have high quality defensive exposure to take care of volatile movements of the market.
4. Do you believe corporate earnings have bottomed out? What are your expectations for the fourth quarter?
Ans. With coming 4th Quarter corporate earnings will bottom out. Within this there are few sectors those have bottomed out in 3Q and many other sectors will bottom out in 4Q. We expect next few quarter corporate earnings in India will see sustained earnings recovery.
5. What kind of allocation should investors assign to sector funds such as Banking and Healthcare? In the current economic environment should investors look at these sectors aggressively?
Ans. Type of fund is entirely dependent on ones risk appetite. Sector funds usually come with high risk –rewards and need to be timed right. For example infrastructure and power funds have been the great disappointments of last half a decade. Similarly BFSI and FMCG has done great performance is last two years. We believe one should look at BFSI and Infrastructure fund aggressively currently for higher risk-reward, we believe time is right for these schemes. For the rest of the investors Diversified equity fund will provide better return opportunities
6. What should be an investor’s strategy in this volatile market?
Ans. The biggest return of next many quarters and years will emerge from current volatile and uncertain environment. Investor should aggressively build or increase their equity portfolio at the current volatile and uncertain environment. In last five years earnings of Indian corporate have almost doubled but overall equity returns have been muted. Market has de-rated significantly due to domestic and international issues. We expect large part of international stress behind us and we will get through with our domestic issues as well in next few quarters. We do not believe current political uncertainty to cause collateral damage to equities and any sharp corrections should be used to buy, increase and re-align portfolio. We expect market so see sustained re-rating and earnings upgrade over the next many quarters.
7. With the capital goods sector possibly having bottomed out, do you feel that this is the correct time to buy units of infrastructure funds? What is the likely sector allocation under Taurus Infrastructure fund over the next three months?
Ans. We believe it is opportune time to put money in rightly balanced infrastructure funds. Many issues that have caused substantial underperformance of the infrastructure sector being currently addressed with all the seriousness. We see resolution of land acquisition, coal pooling, tariff increase, clearance for oil and gas blocks, environment and forest clearance issues, tariff revisions for generating cos etc to happen within next few months. We also expect regulatory environment to ease simultaneously to provide incremental impetus to industry growth. This should significantly benefit capital goods ports, roads, airports, oil and gas and power and power financiers including banks and distribution, construction and real estate companies. We have positioned Taurus Infrastructure to take benefit of significant re-rating and earning upgrade in coming times from these infrastructure plays.
