Rise of Oligopolistic Dominance
As debt-laden distressed companies fall by the wayside, some cash-rich large companies are practically monopolising their sectors
Illustration by Siddhant Jumde
During the 26th meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), one of the MPC members - Jayant R. Varma, Professor, Finance and Accounting, IIM Ahmedabad - made an interesting observation, which many in government institutions would barely admit to. Anecdotal evidence suggests that in several sectors which are characterised by an oligopolistic core and a competitive periphery, the oligopolistic core has weathered the pandemic well and it is the competitive periphery that has been debilitated. Rising profits and profit margins, improving capacity utilisation and lack of new capacity additions create ripe conditions for the oligopolistic core to start exercising pricing power, he had said. An oligopoly is a form of market form where a sector/industry is
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The only circumstance in which this market can see a pullback is if inflation comes back strongly and interest rates are hiked both in the western world and in India.
While you continue to like the Kotaks and the
Berger Paints of the world, are you looking at expanding the number of stocks in your portfolio?
Two things are playing out. One, flows into Marcellus have been very strong over the last 12 months. As the money that we are managing is basically moving towards the billion dollar mark, we are adding a few more stocks because there is only so much you can buy in a name and many of the names that we own we are already accounting for a substantial part of the free float and that is a little uncomfortable.