He expects volatility to persist in the near term, with investors shifting toward safer sectors like IT and pharma, while maintaining higher cash levels and reducing exposure to cyclical and high-beta segments.
These are edited excerpts from the interview.
Q: Have we overshot in the short term? What’s your view on macros?
A: It depends on how long the oil shock persists. This is different from the global financial crisis and even the Ukraine crisis. Earlier, there was a threat of supply disruption, but it did not materialise. This time, we are seeing actual curtailment of oil and gas supply, with countries running out of reserves.
Watch the full conversation here
The level of oil prices is less important. Even if oil stays at $100, the world will adjust. What is troubling markets is the duration of uncertainty.
Q: The “buy the dip” strategy hasn’t worked this time. Why?
A: Markets have been conditioned to expect central banks and governments to fix crises through monetary and fiscal measures. But when there are physical supply issues, such measures cannot resolve the problem.
Q: Where do we go from here? What is the investing approach?
A: The situation is controllable and avoidable. A resolution depends on a few key decisions. The economic and physical pain will determine how quickly it is resolved. The key variable remains the duration of the crisis, not commodity prices.
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Q: What is your view on oil marketing companies (OMCs)?
A: We remain underweight due to frequent government intervention. Even when refining margins improve, markets do not treat it as sustainable. These are seen as transient factors.
Q: Are power or pharma stocks the safe havens? What are you buying?
A: This is a flight to safety. We have increased exposure to IT after being underweight earlier. IT corrected sharply and became attractive. Midcap IT names were down 32–33% recently.
We prefer midcap IT due to 15–20% growth potential. The US economy is less impacted, and IT benefits from both US exposure and currency movement.
We are also adding to pharma, driven by structural factors like GLP-1 opportunities and some defensive positioning.
Q: Have you made portfolio changes?
A: We have increased cash from 4–6% to 9–10%. We reduced higher beta names in industrials, autos, auto ancillaries and non-banking financial companies (NBFCs).
Q: What is your view on exchanges like Multi-Commodity Exchange of India (MCX)?
A: We see exchanges, especially commodities, as a structural play. Growth is driven by higher options participation and commodity exposure, like oil. It remains a long-term theme.
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