Avendus Investment Managers has begun deploying cash after holding about 35% in reserves through February, as equity valuations eased following a market decline, its Chief Investment Officer Ganeshram Jayaraman said.
He said the decision to hold cash stemmed from concerns that markets were not pricing in several risks, and that the recent correction has improved entry levels for stock selection.
The comments came after India's benchmark NSE Nifty 50 had fallen more than 13% this year, entering a correction phase amid domestic and global pressures. These include higher securities transaction tax, geopolitical tensions in the Middle East, and a weaker rupee.
Jayaraman said the firm follows an approach that prioritises cash as part of portfolio construction and focuses on buying stocks at lower valuations. “Cash is very critical in our approach to investing. We want to pursue an absolute return strategy,” he told NDTV Profit in a televised interaction.
He said the firm maintained elevated cash levels from October until February as it assessed valuations and risks. “We were sitting on about 35% cash end of February,” he said.
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He cited concerns that markets were overlooking multiple risks, including the impact of tariffs, developments in artificial intelligence, and domestic macro conditions. He also pointed to pressure in parts of the economy. “We were little concerned that the street was ignoring the risks,” he said.
Jayaraman said balance sheets remain uneven across segments. Large companies are in strong financial shape, he said, while smaller businesses and some households face constraints. “Large corporates are in great shape… but in SMEs, not as much,” he said.
He added that financial conditions vary across households. “The top five crore households… are absolutely in pristine shape. The next 20 crore households, not too good,” he said.
He also drew a distinction between fiscal positions. “Central Government, fine. State governments, not so fine,” he said.
Jayaraman said the firm does not attempt to predict macro events and instead focuses on how companies can withstand uncertainty. “We are not trying to predict… we can't predict 20 moving parts,” he said. “What you can assess… is how well are these businesses capable of absorbing them.”
He said valuation discipline remains central to investment decisions, including measures beyond price-to-earnings ratios. “You control the controllables, what multiples you are paying,” he said.
Jayaraman said market corrections are a recurring feature. “In the last 25 years, every year, without exception, markets have corrected at least 10% during the year,” he said, noting that in most years such declines have been followed by gains within the same year.
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