In an interview with ETMarkets, Ravuri has over 24 years of experience in Indian financial markets, primarily in equity research and fund management. immune to global shocks”, edited excerpts:
In the first six months of 2022, benchmarks hit a new 52-week low. Where are the markets heading in the next six months?
We live in a difficult environment where multiple headwinds are at play. Inflation became a matter of concern; rising interest rates have an impact on economic growth and stock valuations.
So there are concerns about the economy, geopolitics and excesses in certain pockets of the markets. We can expect the market to stabilize when clarity emerges on at least a few of these issues.
The carnage was seen in the small and mid cap space in the first half of 2022. Do you think the excesses are now gone and we are sitting in a comfortable position when it comes to valuations?
Yes, I agree that the excesses have diminished to a large extent. With the exception of some stocks where we believe valuations are still expensive, the broader markets are trading at a reasonable valuation.
How do we compare to our global peers after the recent drop?
India has always traded at a premium to other emerging countries, and even after this correction, India continues to trade at a premium as markets corrected across the globe.
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Given the structural growth history, we believe India will always trade at a premium.
Where do you see commodity prices heading over the next six months of 2022?
As global slowdown/recession fears gather momentum, we believe many commodities will correct in the coming months.
However, some commodities could remain firm as supplies are expected to remain firm due to chronic underinvestment.
The first six months of 2022 saw war, inflation, Fed rate hikes, interest rate hikes, crude oil at $120 and supply disruptions. Do you think these factors will play a major role in H22022?
Absolutely. These factors influence economic growth, corporate profits and the cost of capital. Markets tend to recalibrate according to the evolution of these factors.
Any key learnings you would like to share with investors?
Discipline and diversification are the most important lessons. Many people have misjudged the outlook for new era companies and ignored fundamentals such as cash flow and earnings.
How are earnings likely to play out in H2022 or the rest of FY23 amid global headwinds and supply bottlenecks?
Consensus estimates are still at 16% earnings growth for NIFTY50 for FY23, but most of us expect a downward revision to those numbers in the coming months.
We are down double digits from the high but still not in a bear market. Can we say that this is the time of March 2020 for retail investors, and they shouldn’t miss this opportunity?
We saw a decent correction in stock prices and the exuberance subsided, but it’s not like March 2020, when there was total panic and fear.
With valuations reasonable, the Indian economy should fare much better than most other economies, but we are not immune to global shocks.
Which sectors are likely to take center stage in H22022 and why?
Information technology and finance are expected to receive maximum attention in the near future. On the one hand, Indian IT companies have proven their capabilities and are likely to benefit from global digitization spending, but on the other hand, markets are eagerly looking for any signs of IT spending slowing due to fears of upheaval in the States. States, particularly in the technology sector.
Financial companies are trading at attractive valuations relative to their historical average. Moreover, their balance sheets are strong and the NPA cycle is behind us.
These stocks are likely to do well as loan growth improves and as FII sales decline.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)