Peaking global risk appetite and an expected rise in global volatility will trigger fund flows from the high-risk environment to low-risk markets like Asia, including India.
That's the view from Quant Capital's Managing Director and Chief Executive Sandeep Tandon. Even if 10-15% of the money that shifts from the U.S. in the next three years comes to Asia, "it will support the Asian equities in a big way with India being one of the biggest beneficiaries", Tandon told BloombergQuint's Niraj Shah. But he expects a correction and consolidation phase in India first.
"This is the year to identify mid and large beaten-down names, under-owned, under-researched stocks because India's risk appetite from a near-term perspective may have made a trading top, but from a long-term, we have a long way to go as compared to the U.S. markets," he said. "Which means, mid and small-cap stocks will perform better compared to large caps.”
Quant Capital has pruned its exposure to high-beta or more volatile stocks and sectors and increased exposure towards defensive sectors such as IT, pharmaceuticals, healthcare and select infrastructure sectors, the fund said in a note to clients.
Infrastructure, Tandon said, is one segment that has hit the bottom and offers value. From a longer perspective, a buy on dips strategy for these stocks will give good results, he said.
A Decade Of Agriculture
Tandon said agri-commodity prices might see "absurd price movements" in the next 10 years. "2020-2030 may be the decade of agriculture. A massive agricultural bull run, something that we have not seen in our lifetime is unlocking."
Extreme cold events, like the one recently seen in Texas, may lead to an upmove in agricultural prices due to supply constraints. "This will happen over a period of time leading to the agricultural bull run. Cascading effect of this may be seen on other commodities as well."
However, Tandon said it would be difficult to play the agriculture super cycle in India since local markets are politically controlled and prices are regulated.
Watch full interview here:
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