Timing The Market Is Nobody's Cup Of Tea, Says Pramod Gubbi

Lot of moving factors and cues contribute to the direction in which the market is moving. These events or changes may not fully drive a downturn, but some of these elements signal some anticipated movement in the markets.

"We are moving to a tricky macro situation. We were going through a cyclical slow down, driven by consumption slow-down. We had post-Covid spending frenzy as well," said Pramod Gubbi, co-founder of Marcellus Investment.

The growth in the economy had come without job creation and the consumer showed that weakness, according to Gubbi. The Budget will have to boost consumption in the near term, while balancing it with the objective of continuation of fiscal consolidation, he said.

In the global macro, there have been changes like inflationary expectations rising, Trump administration, and a stronger dollar index among others, Gubbi pointed out.

"India is structurally a current account deficit economy to that account. The capital account has saved us over the years. We've seen balance of payment turning negative and we haven't seen this in a while now. For fiscal consolidation, RBI needs to do the heavy lifting in terms of monetary easing. Which is tricky, given rupee's movement," said Gubbi.

When the domestic markets see sharp downturns, some investors increase their margin of safety, while others look to buy the dip. Gubbi has separate strategies for both retail investors.

"It is some great opportunities to buy into some great franchises in this down-turn. Even great franchises will report weak numbers. Market has been reacting to every miss. One should have dry powder to buy into these," he said.

Despite the traction to buy dips, investing strategy should be positioned to create long-term gains.

"We've recommended people should stick to their asset allocation with equity and fixed income. Have a disciplined approach with systematic balancing," he said.

"Timing the market is nobody's cup of tea, I can say that after spending a few decades in the market," Gubbi noted with a grin.

With domestic cues signaling growth, IT might be the cushion in one's portfolio, according to the expert.

"Earnings have not been a disaster, but markets have been brutal in punishing near misses as well. IT is a macro cycle play, it's based on discretionary spends of western companies, in terms of boosting their IT spends," he said.

Further, strengths in the sector are few. Along with these, there are also positive changes from elements like generative AI, that can bring about changes as well.

There are very strong factors for IT as a business model. It is asset light, cash generative and predictable, he said. "There is downside protection and scope for inorganic growth with acquisitions. IT provides a long term cushion and there has been a structural re-ratings in the sector. There are positive changes from generative AI, but will also bring in some deflation. The net effect can still look positive."