The markets have been volatile since the second wave of COVID-19 hit India hard. How is the market reading the new curbs imposed by the various state governments and is a slowdown around the corner again? We spoke to Punita Kumar Sinha, Managing Partner at Pacific Paradigm Advisors and Chairperson at InCred AMC.
“I don’t think the economy is going to get too badly affected by the second wave,” he said.
She thinks that one should invest in this downturn. “This is a phase. I expect this second wave of COVID-19 too will be a phase. I believe in a couple of months the cases will be reduced and more people will be vaccinated and business activity will continue to pick up. Valuation will start looking attractive again and if there is a sell-down, there will be opportunity to pick up again good value names for long-term sustainable growth,” she added.
According to her, the rural sector has held up quite well over the last 12 months and has done remarkably well even during COVID.
“The rural story is a secular story at the moment and therefore if you find value in the rural sector, one should continue to be invested. If we want to play recovery, one should invest in things that haven’t seen a normal business activity. That is where potentially we will see the strongest rebound going forward,” she stated.
Digital and insurance are secular stories, she mentioned. “Digital theme is pretty much here to stay because every business need to be digitized more. It has become core to any business. Insurance is a long-term theme. India is very under-penetrated in insurance, all forms of insurance are going to see an increase. You have to look at companies which look attractively valued in that space,” she explained.
Midcaps have outperformed, Sinha said. “We have seen midcaps and smallcaps – particularly the value versus growth trade has been doing quite well. Most investors have moved away a little bit from growth stocks to value stocks and cyclicals and that trade is still being held on to. In midcaps I would be a little more selective given that they have performed quite well,” she pointed out.
For full interview, watch the video.