Be patient; have a diversified portfolio with infra, capital goods and bank stocks: Sunil Subramaniam
Sunil Subramaniam, MD & CEO, Sundaram Mutual, says: “ I would play the whole infra, defence story through corporate banks on the one side and through a diversified pick of EPC contractors and all of that and generally building materials, cement, steel and all of that should form part of your portfolio. Having a good diversified portfolio within the infra, capital goods and banks is important. Second, having a slightly longer term, do not expect massive wealth creation to happen in the next few months or years, give it a bit more space and time.”
Markets have made a roaring comeback. Now, on the global front, news has deteriorated. On the liquidity front, FIIs have turned net sellers. But if one looks at the market strength purely based on price, for the smallcap, midcap and the largecap, the strength is quite amazing. What is causing this constructive price action in the market? Sunil Subramaniam: I think it is the SIP book flow.
It has almost touched Rs 20,000 crore and my analysis shows that more than half of it is in small and midcap funds. So, what is happening is that these funds are getting buying power every month and what happens is that the difference between largecaps, midcaps and smallcaps in liquidity is well known. But what is also very clear is that even within the smallcap pack, which is stock number 251 and below, there is a huge drop off on liquidity as you go down the cap curve.
Fund managers obviously have a filter for quality as in growth prospects. Those companies are naturally getting higher in allocations and valuations and the lack of free float means that the prices are rising quite high.
