As geopolitical tensions rattle markets and crude prices turn volatile, investors may be tempted to treat the sharp correction as a buying opportunity. But Mihir Vora, Chief Investment Officer at TRUST Mutual Fund, believes this is not the time to rush.
“Everything is up in the air. We are not sure how long this will last, so right now it is a wait-and-watch situation,” Vora told NDTV Profit.
Unlike previous geopolitical flare-ups, Vora cautioned that the current situation could prove more complex. When the Ukraine war began, many assumed it would end quickly. Instead, it lingered, with far-reaching economic consequences.
“Unlike the Ukraine situation, oil and gas supply is impacted more directly,” he noted. Elevated energy prices could spill over into inflation, margins and growth expectations if the conflict stretches.
Given the uncertainty, Vora said he is talking from his point of view that he would eather conserve cash than hurry. “From my point of view, we hold. We are already investing. We would like to preserve cash. It is not yet a clear sell-or-buy situation,” he said.
India's Underperformance A Boon
Despite the sharp moves in global markets, Vora characterises the domestic correction so far as “normal”, not a disorderly capitulation.
ALSO READ: Nifty Down Nearly 2%, Sensex Plunges 1,500 Points — Three Reasons Why Markets Are Falling
The broader Indian market has seen a pullback, but not a sharper collapse. In fact, he believes India's relative underperformance in recent years may now act as a cushion.
“Indian markets have underperformed for quite some time. That may mean we fall significantly less than other markets,” he said, contrasting this with markets such as Korea that have nearly doubled or tripled in recent years but saw a sharp decline on Wednesday.
Being relatively ignored by global investors, in his view, may turn out to be a blessing in a global sell-off.
Valuations in India had already corrected to levels where there was comfort and growth visibility. “That still remains,” he said, with one caveat. If the situation elongates materially, growth assumptions themselves could come under question.
“That is why we are cautious. If it turns, we will be happy,” he added.
Vora also added that when markets rebound, it is not necessarily the cheapest stocks that lead the rally. Instead, companies with strong earnings momentum and improving fundamentals tend to outperform.
His advice: keep a prepared watchlist. Label the stocks you would like to own. But do not deploy capital impulsively in the first few days of volatility.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.