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“I am one of those guys who is looking for strength. I am looking for those companies that beat and that beat consistently because ultimately that is the characteristic of any wealth creator that you see in Indian stock markets. All these unglamorous, boring companies – electric equipment makers – tend to beat.”
Areas such as domestic consumption, building materials, home consumption, and manufacturing show potential for growth. However, caution should be exercised when considering valuations. Playing specific themes in the market is the best approach. The yield gap between the US and India is at a decade low, which could impact FPI flows and currency. One should be selective in deploying new money, focusing on sectors like home improvement, technology, and manufacturing.
Safir Anand, believes in remaining invested in the market but also exercising caution. He has reduced his holdings in the chemical sector due to its phenomenal run-up. Anand is bullish on PSU banks due to changes in their functioning and improved financial performance. He has not increased or decreased his positions in new tech companies but is optimistic about their focus on profitability.
Bajaj Finance Ltd, Titan Company, Relaxo Footwear, Havells India, Deepak Nitrite and Balkrishna Industries are among multibagger stocks that delivered up to 6,685 per cent returns in the last 20 years.
"Over the last six months, the markets overall have had a good run and particularly the performance in the mid and small cap space has been spectacular. This has also led to a tremendous up move in valuation. We are seeing a lot of momentum buying in this space, which is a matter of concern. One must be cautious before entering in lump sum in the market at this juncture. We need to adopt a stock-specific approach in terms of what we buy."