Sitting On Cash Could Be Key Strategy To Weathering Volatility, Says Andrew Holland
The year has been volatile so far, with the benchmark index falling five out of the eight sessions.
As Indian markets face mounting uncertainty with benchmark index falling back to the so-called 'correction zone', Andrew Holland, the chief executive officer of Avendus Alternate Strategies, says sitting on cash until the volatility subsides could be a smart strategy.
“There are no big expectations this earnings season, and if anything, downgrades are more likely,” Holland told NDTV Profit.
Holland pointed that the third quarter earnings of Tata Consultancy Services Ltd., came in slightly below expectations despite optimism in their commentary. “I don’t think that bodes well for the rest of the sectors going forward,” he said.
With earnings downgrades on the horizon, he suggested that the market is already pricing in these potential setbacks. “There’s no catalyst for this market, given the earnings downgrades that are coming,” he added.
The year has been volatile so far, with the benchmark index falling five out of the eight sessions. The benchmark NSE Nifty 50 and BSE Sensex have fallen by 0.8% and 0.92%, respectively.
Andrew Holland, chief executive officer of Avendus Capital Public Markets Alternate Strategies LLP. (Source: Avendus Capital's website)
The slowdown of the economy is another key factor contributing to Holland's cautious stance. While the forecast for GDP growth is at 6.4%, he anticipates it will likely be closer to 6%. “This doesn’t bode well going into the final quarter of the year,” he stated, highlighting the lack of government spending could further weigh on earnings.
With government expenditure holding steady for now, Holland emphasised that “if there is no government spending by March, then there will probably be more downgrades.”
He also expressed skepticism about the earnings outlook for 2025-26, predicting only an optimistic 10% growth before factoring in the potential impact of US President-elect Donald Trump's policies. “Sitting on cash as a strategy ahead of Trump coming in remains a good strategy. Sitting on the sidelines is not a bad strategy at the moment,” he said.
