India's largest hedge fund is no longer hoarding cash.
Avendus Capital Public Markets was holding 50 percent of its capital in cash a month ago, as volatility in the Indian market had spiked to its highest since February. That's no longer the case now, said Chief Executive Officer Andrew Holland.
“We're slowly getting out of the problem areas people were so worried about two months ago,” Holland told BloombergQuint in an interview.
This comes as a number of headwinds -- the rupee, oil prices and a liquidity crunch stemming from the IL&FS crisis -- begin to ease a little. The rupee has appreciated to 71.1 per dollar compared to 74.3 per dollar in mid-October. The price of a barrel of oil has also fallen to $54.4 from $76.4 in early October. “The Reserve Bank of India is also pumping liquidity into the system,” he said.
Holland suggested IT, private banks and infrastructure as some of the key areas to invest in over the next six months. PSU Banks, too, look interesting as they reach the end of their non-performing assets cycle, Holland said. That, however, is an area where investors might want to rent stocks, instead of buying them, he added.
Real estate is another sector which is close to its bottom and will see a turnaround by the second half of 2019. “Not sure if I'll dip my toes in just yet," he said.
While Holland is “not negative” on the market, he still sees challenges ahead. India is currently going through assembly elections in five states, the results of which will be announced on Dec. 11. That will rule the market's mood for a few days, he said.
Another upcoming event is the G20 meeting in Buenos Aires next week. The market will focus on that for cues to the ongoing U.S.-China trade spat, Holland said.
Watch the interview here
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