Best to stick to companies that deliver; avoid bottom-fishing, says Apurva Sheth of SAMCO Securities
Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, believes that geopolitical risks and rising US bond yields are major worries for global financial markets. In an interview with Livemint, he recommends sticking to companies that are delivering consistently rather than trying to bottom fish. For Indians, equities are the best asset class giving a CAGR of 12-14 percent over the long run which no other asset has given, he added.
Edited Excerpts: The Indian market has already corrected almost 4 percent since the conflict between Israel and Hamas started on October 7. With geopolitical risk increasing, there has been a flight of capital from riskier assets. Foreign Portfolio Investors (FPIs) have sold equities worth ₹10,754 crores on a provisional basis since the conflict began.
Markets have their own sweet way of pricing in the impact of these conflicts. The 4 percent movement that we have seen in the Indian equity market may look like the impact is not priced in. But if you look at the international gold prices, you will realise that they have been rocketing higher from the day the conflict erupted.
Gold is up by 10 percent in just 20 calendar days. It is one of the fastest moves in the shortest time in gold we have seen since Covid lows. With geopolitical conflicts rising, the risk premium attached to equities has gone up.
US 10-year bonds are also witnessing selling pressure. This has pushed the yields higher. Hence, equities are believed to have become less remunerative while bonds have become more attractive leading to an outflow from equities.
So far, the September quarter earnings have been reasonable. The numbers from the BFSI space are really good. Numbers from IT companies have not been up to
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