Will next leg of rally come from financials and private banking stocks? Gurmeet Chadha answers
«It is important to preserve what we have made. Last two-three years the returns have been very-very good. So, maybe a little more prudent and balanced approach will ensure that we preserve these returns,» says Gurmeet Chadha, Complete Circle Consultants.
Not pure play commodities, but commodity stocks definitely, and in particular metals after China talking about a slew of measures and a fair amount of rate cuts as well coming in in the remainder part of the year too, that sort of instilled a sentimental move on metals. But would you look at it from an investment point of view?
Gurmeet Chadha: We got to be more tactical when it comes to metals and commodities. They have announced a host of measures which clearly tells you that now they have to resort to more stimulus to revive the economy.
And also, traditionally, if you see a weak dollar in the rate cuts, I am not saying weak in like absolute sense, but a relatively weaker dollar is always positive for commodities.
So, a multi-asset approach is advisable at this point of time. Valuations are stretched in a lot of pockets. NSC Small Cap for example trades at 35 times earnings. If you see almost 50% of the stocks are seeing EPS downgrades. So, valuations are stressed. And at this point of time, if you can diversify towards A) precious metals, which is gold, silver is both probably precious and industrial and some maybe ferrous and non-ferrous, as well as bonds.
So, rate cuts, stimulus from China, relatively weaker dollar is always positive for commodities and
