As a sluggish Q2 earnings season is leading to downgrades in many stocks, Abhishek Singh, Fund Manager, DSP Mutual Fund, says the market is not factoring in the medium-term outlook yet for most of the stocks.
«Markets could be justified in this stance if we see sustained improvement in the coming quarters,» he says. Edited excerpts from a chat:
I've been cautious about valuations for some time. Revenue growth had been slowing for several quarters, and now even profits are lagging. I haven’t had to make major adjustments to my portfolio, as I've maintained a conservative stance. I steer clear of sectors with high growth expectations that are already being priced at premium valuations. Disappointments in these segments are often penalized sharply. In a relatively concentrated portfolio, limiting downsides is what matters most. From my experience, even company management and promoters are sometimes surprised by the upside in their businesses. Upsides are hard to know. My focus remains on minimizing potential downsides.
I've made a few adjustments to the portfolio, but nothing major. I focus on businesses I want to buy and the