Economic Times - Time right to build well-balanced portfolio: Puneet Nanda
24 Feb 2009, 1329 hrs IST, Shailesh Menon, ET Bureau
http://economictimes.indiatimes.com/articleshow/4182153.cms?prtpage=1
MUMBAI: "Unlike a lot of people who believe there is further downside, I don't think the market will breach the (lower) levels it reached last
October. Thanks to good liquidity, I expect buying to start in some time. I feel the Sensex would range between 8000 and 11,000 in the coming months," said ICICI Prudential Life Insurance CIO Puneet Nanda.
According to Mr Nanda, the March quarter "could be similar or worse" than the third quarter. "But all that has been factored in by the market. Lower interest rates and fallen commodity prices will catch up the economy towards the second half of current year," he added.
Mr Nanda is of the opinion that more than fourth quarter results, it will be election and global markets that will have bearing on where the Indian market is headed.
"People are clearly expecting a fractured mandate this time round. If the newly-elected government is headed by either of the two national political parties, there shouldn't be anything for India Inc. to worry about. Only a highly-fragmented coalition can scare corporate India and markets," Mr Nanda opined.
According to Mr Nanda, investors should be buying equity shares at this point of time. "Now is the time to build a well-balanced portfolio," he added.
Among sectors, Mr Nanda likes banks and financial services institutions. "Every bank today is virtually below its book value. Contrary to popular perception, almost all Indian banks are well-capitalised; their NPA ratios are at pretty comfortable levels," he said.
Mr Nanda also had good things to say about two-wheeler auto companies and four wheeler manufacturers that make entry-level cars. "Two wheelers should benefit from upbeat rural consumption story. Companies with entry-level cars are likely to do well once demand gather steam. Lower financing cost and reduced input costs coupled with fallen fuel charges will help growth in actual demand for cars and two-wheelers," added Mr Nanda.
With respect to infrastructure companies, Mr Nanda advises investors to pick companies that get government orders. "Infrastructure companies that are largely dependent on corporate capex are in trouble," warns Mr Nanda.
According to Mr Nanda, real estate, fundamentally, has a very positive outlook over the long term, say 10 to 20 years. "Clearly there is demand for real estate; the problem is too much expectation-build-up around the sector. We've not invested in real estate companies for the simple reason that they are not very transparent; we did not like their valuations as well," Mr Nanda added.
According to Mr Nanda, insurance sector has been net buyer in the equities market for quite some time now. "Insurance companies have invested (in to stocks) close to a billion dollar in January. The trend of investing into equities will continue, thanks to healthy inflows through renewal premium," he added.
Speaking of investment strategies adopted by insurance companies, Mr Nanda said: "We do not essentially go for flavours of the day. We are not investing for short-term quick returns; we're aiming at long-term out performance. We're not passive investors, but we do not punt in market either. On the fixed income side, we are risk-averse about credit risk in investments. We only invest in highly-rated securities or Government papers. This may be compromising of returns, but we're fine doing that."
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