“In the short-term, I do not know how much more downside there is. We prefer to look at individual stocks/sectors, their valuations and risk-reward ratio. We invest when the risk-reward ratio is at least 1:3 in favor of reward,” says Parmar, Co-founder, Aurum Capital.
In an interview with ETMarkets, he warned that the time for BQAAP (Buy Quality At Any Price) investors will be challenged for the next few years. “And a time/price correction may happen in many such names. In fact it’s already happening for a while. One must always pay heed to valuations. Buy good stocks at value. That is the mantra for making superior and risk-adjusted returns in the market,” he said.
He suggests conservative investors to look at stocks which will give a over 5 per cent sustainable yield for the foreseeable future. “There are many such stocks in the market. Some portion of the portfolio can be allocated to these types of stocks. They have fallen far less and will continue to fall less if markets still correct more from here,” he says.
While Nifty is down around 10 per cent year-to-date, realty and IT indices have fallen by more than 20 per cent so far in 2022.
“We like the realty sector out of the two. We are completely out of the IT sector. Due to macro headwinds, we had anticipated a slowdown in IT spending, which may play out now. Also, valuations had gone far ahead of what was comfortable,” he said explaining his bearishness on IT stocks.
After last week’s fall, Parmar is bullish on sectors like metals/mining, cement, infra, capital goods, telecom, real estate, specialty chemicals, paper, hotels and financials. “We believe a great amount of money is to be made in the Indian stock markets, provided one has the patience and long-term vision. As I believe in the long-term, we have only one way to go – up,” the investment advisor said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)