Our Recent Calls & Overweights
Recent Overweight’s (Banking, Pharma, PSU, Gold) have worked exceedingly well!
Our current take on the Market & recent overweight Sectors
Despite, the unprecedented second wave, we are constructive on the Indian equity markets. While, the human toll and the suffering has been devastating, we anticipated early on, that the impact on the economy and the markets will be minimal. Our reasoning has been that the immunity that is acquired either due to past infection or vaccination will significantly improve the pandemic situation in the coming three to four months.
Not only this, going forward, there are several positive factors unfolding at the same time, that gives us the confidence that the markets are well supported even though they are not cheap – (1) Unorganized to organized shift, (2) low interest rate environment, which besides the other benefits, may even lead to the revival of the moribund real estate sector, (3) well capitalized and stronger banks that are in good position to meet the credit requirements of the economy, (4) China Plus one factor, (5) Central banks across the world that are more than eager to support the economy as well as the markets.
We are conscious of the fact that rising interest rate environment may act as a significant headwind and may limit the upside hereon. Possible correction in the USA markets too poses some risk, though we do not anticipate a very deep correction.
Driven by the fear of second wave NIFTY was down 7/8% to 14,250 levels by Mid-April. We used this sell off, to significantly increase allocation to Banking, sector funds. Earlier on, in the month of March, we had added Gold and Pharma to our portfolio as well as continued to maintain our PSU overweight stance.
All these calls have worked exceedingly well recently.
- Our recent call to overweight Bank
While NIFTY was down a modest 7/8% due to the second wave of PANDEMIC in our country, NIFTY Bank index was down much sharper 18% from the recent peak of 37,232. The investing community was extremely worried about the bad loan provisions that could get triggered due to the second wave.
However. in view of the several reasons outlined above, we used the sell off to significantly load up on banking sector funds. (Around 15% of our total portfolio including Debt & Equity).
These deployments are up over 10% since then.
- Used the dip in NIFTY Pharma index to rebuild pharma positions
We have remained extremely bullish on the Pharma sector for over 18 months now (since Jan 2020) and have reiterated the same from time to time.
Earlier on, we had used the whopping rally in pharma sector to reduce the massive pharma overweight position, somewhat.
In Mid-March this year, NIFTY Pharma index temporarily dipped to 11,500 levels. As we bring significant understanding of the relative sectoral valuations, we used this opportunity to build back our pharma positions.
Nifty Pharma index is up 20% since the Mid-March lows.
- Buy call on Gold
We had given a buy call on Gold on 7th March 2021 clearly outlining our rationale for the same. (Please read our note for detailed reasoning https://wealthspring.in/2021/03/07/gold-our-views/)
Since then, Gold price is up close to 8%.
- Continue to remain Overweight on Public Sector companies
We had strongly recommended funds deployed in Public Sector theme, in our advisory note published on 9th December 2019 and then reiterated the same view again on 13th April 2020.
We have continued our PSU overweight stance for some-time now.
All our recent above calls (including the PSU overweight stance) have given our customers’ handsome returns.