Tridib Pathak, Co-head of Equity, Ocean Dial Asset Management India and Fund Manager at Avendus Olivo believes that the age of 25-30 is a perfect time to take a very long-term view on investments, next 25-30 years.
Talking about the themes for 2022, he said that there is a diverse set of opportunities available in the market. “It is important to focus on fundamental investing driven by bottom-up stock selection,” Pathak, who has an overall experience spanning more than three decades, told Moneycontrol.
Consumption, banking, financial services and IT services are the spaces where Avendus finds a lot of stock opportunities, he says, adding within consumption, they prefer consumer discretionary especially ‘Food Tech’ companies.
Will India continue to enjoy premium to most of emerging markets in 2022 and why?
We believe India’s premium will continue, even though it is +1 standard deviation above its past average. India will continue to be the fastest growing large economy with a robust corporate profit growth cycle now kicking in. Its macro-economic stability has also vastly improved with fiscal deficit, current account deficit and inflation broadly under control.
Furthermore, Corporate India’s Return on Equity (RoE) is now improving back to average levels of around 15 percent in the past. Over the next few years, India’s incremental GDP will be higher than the sum of incremental GDP of nine high growth emerging markets. As India gets ‘Too big to ignore’, we will see global investors increasingly making a dedicated country allocation to India rather than as a part of an emerging market basket.
The market has seen the first biggest correction since the beginning of bull-run last year. Have you spotted any themes that one has to consider for investing in the current free-fall, for 2022, and why?
There is a diverse set of opportunities available in the market. It is important to focus on fundamental investing driven by bottom-up stock selection.
Consumption, banking, financial services and IT services are the spaces where we find a lot of stock opportunities. We are also increasingly focussed on businesses that are benefiting from next generation mega-trends such as ‘mainstreaming of digitalisation’ and ‘China +1 – i.e. diversification of global supply chains’.
Within consumption, we prefer consumer discretionary especially ‘Food Tech’ companies. Within banking, we prefer large private banks and in financial services we like ‘platform’ companies. We also prefer largecap IT services companies.
Do you think there could be more correction in coming months given the Omicron worries, expected rate hikes and liquidity tightening? Also is there any possibility of double digit returns in 2022 in comparison with 2021 (up over 20 percent so far)?
We normally do not have any specific expectations on short term market movements. Markets have seen a healthy correction, opening up opportunities across. History has shown that ‘all’ past corrections have eventually proven to be an opportunity to invest for the long term. Having said this, we do expect double-digit earnings growth in 2022 and we do not expect any large valuation downsides.
How do you sum up the year 2021 in terms of events that supported/dragged the Indian equities? And what are the major events to watch out for in the coming year 2022?
2021 has quite been a test for the Indian economy and equity markets. A test which has been passed successfully. The economy has recovered near to pre-Covid levels and Indian markets have been one of the best performing markets in the World. Two things stood out in 2021:a) The resilience of the economy and markets, in the face of the Covid crisis.
b) Mainstreaming of digitalization in the economy and its impact on available investment opportunities.
In 2022, we look forward to continued resilience of the Indian economy and markets in the light of persistent risks related to Covid, especially Omicron. It is interesting to note that the markets have been quite resilient during the 2nd wave earlier in April/May 2021. This was mainly because overall economic activity continued unrestricted except for localised lockdowns. The stoppage/disruption of economic activity again in case the 3rd wave happens, will be punitive.
Now more than a month left for the Union Budget presentation. Do you think it would be a big bang budget and what would be focus areas? Also is there any populist measures given the states elections going ahead?
Budget 2021 was a clear shift in policy stance. Earlier, pre-Covid the government focussed on achieving macro-economic stability by reducing fiscal deficit, reducing current account deficit and inflation targeting within the 4-6 percent range. The […]
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