At a time when Indian markets have been subjected to immense volatility and foreign outflows due to the ongoing Iran War, stockpicking becomes ever so important, especially with valuations now returning to lower levels. Harsha Upadhyaya, CIO of Kotak Mahindra AMC, believes capitalising on lower valuations is essential to having a diversified portfolio.
Speaking to NDTV Profit, Upadhyaya stated that the domestic investors, at the end of the day, are anchoring the markets.
"If you go by the flows that the industry has seen during the month of March or the first few days of April, it's clear that the domestic retail investors have continued to participate in the equity market and continue to have faith in Indian equities," he noted.
"And if you are a long-term investor, if you're going to make staggered investments, I think the lower valuations that have been offered by the market are another good entry point to do that," he added.
When asked about pockets of valuation in a volatile market that is still feeling the impact of an unprecedented geopolitical scenario, Upadhyay pointed to one single standout sector.
"I don't think there is any safer bet in that sense at this point in time except for maybe the defence segment, which will continue to receive orders despite what's happening around the world," he said. "That's the only segment where you can be very confident in terms of the demand continuing at the same pace or at a higher pace."
Upadhyay also highlighted sectors that could be primed for a rapid recovery once these geopolitical tensions ease.
"While there could be a very, very strong pullback in some of the segments where there has been a larger impact because of the war—for example, oil marketing companies, aviation stocks, or some of the chemical stocks, or some of the areas where fuel becomes a larger part of the overall margin profile, etc.—there could be a sharp bounce-back if there is an early resolution to the conflict," he said.
Despite these tactical opportunities, Upadhyaya warned against betting too heavily on a single outcome.
"So to that extent, as a portfolio manager, we would prefer to have a diversified focus on almost all of the sectors and then take a call as the situation unfolds. It'll be better to take those calls rather than preempting something at this point," he concluded.
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