Manish Chokhani's Word Of Caution For Investors: 'Only Thing In Hand Is Entry Price'
Some sanity is always good for long-term health, Chokhani told NDTV Profit in an interaction. He, however, believes that there are some opportunities.
The Indian equity market's valuations will take a couple of more months to be reset, however, the long-term trajectory is still up, according to Enam Holdings' Director Manish Chokhani. He advises investors to not rush to deploy money.
Some sanity is always good for long-term health, Chokhani told NDTV Profit in an interaction. He, however, believes that there are some opportunities in the market.
To remain protected in these downturns, he recommends investing in companies that will be 5 times their PE in five years.
"In this 5-year period if it delivers, that's the best way to think about and wherever you can't reach a conclusion based on whatever you know, avoid that sector," he said. "If you are happy just being an index investor, then no business going in small-mid disruptive companies."
"I'm waiting for something mouth-watering to occur," Chokhani said, while noting that the median stock in India of top 500 companies is down 33%.
The whole focus of discussion is valuation, he said, citing that Infosys in 2000-2001 had hit $45 billion in market capitalisation which 24 years later has become $90 billon.
"In rupee terms, it (the valuation) will look optically better given rupee collapse but in real terms, the investors didn't make money because the (entry) price paid was high," he said.
According to him, sometimes it is better to wait for "sanity to come back to market". He adds that regardless of DeepSeek or earnings slowdown, it was time for a pause considering how overheated the market was across sectors.
Chokhani says "the supply response from IPO, QIP market, promoter selling, and overseas strategic investor selling has helped cool things down".
According to him, the real interest rate is the force of gravity in the market. In India, it typically peaks 8-10% on a 10-year period while at the bottom, it is at 5%, he noted. "If you apply reciprocal, the market tends to top out at 20 times PE multiple, bottom out at 12.5 times," he said.
The West artificially suppressed the interest rate, driving it down, he explained. "If US 5-year and 10-year interest rate is closer to 5% rather than 2% which it had forced it down to, it makes a case for reset of valuation downwards globally. RBI has been in a tight spot as India-US differential has to be maintained."
Given this turmoil, Chokhani advises caution, stressing that the only thing an investor has in his hand in the entry price, post which, everything changes.
This price has to be so compelling that the sector one may feel more bearish about should feel like buying, he said, adding that is the price signal that you ought to be waiting for.
