Rs 20 lakh crore investor wealth erased in 3 sessions; ASK’s Sandip Bansal shares his money-making strategy

Tracking weak global cues, market capitalisation of BSE-listed firms tanked by Rs 20 lakh crore in just three trading sessions. The BSE Sensex, which scaled its all-time high of 82,129.49 on August 1, traded nearly 30 points down at 78,729 in the afternoon trade on August 6. In an interaction with Business Today, Sandip Bansal, Senior Portfolio Manager, ASK Investment Managers shared his insights on the factors which will drive Indian equity markets going ahead and what strategy investors should adopt amid the ongoing uncertainty. Edited excerpts:

BT: How do you see the movement of the benchmark equity indices BSE Sensex and NSE Nifty till December 2024?

Bansal: Most large markets globally, barring a few, are close to their all-time highs. So, there is buoyancy in equities as an asset class per se. Indian markets, viewed in this context, present one of the best long-term growth stories, with continuing policy of reforms over the medium-term and double-digit earnings growth over the next few years. While what markets would do over the next few months is difficult to comment on, given the potential oversized impact of short-term events, the structures of the economy remain solid and on an improving upward trajectory.

BT: What are your expectations from mid-cap and small-caps after the superlative returns in the recent past?

Bansal: While there are pockets of excesses within them, it would not be fair to paint the entire basket with one brush. Many businesses have seen a sharp improvement in earnings or long-term growth prospects. In such cases, the returns have a fundamental basis and are not necessarily due to liquidity-chasing stocks. Going ahead, it may become more stock-specific, with returns aligning themselves with those companies that deliver on high expectations.

BT: How has ASK Lighthouse PMS strategy managed to outperform the benchmark since its inception in March 2024?

Bansal: ASK Lighthouse Portfolio invests predominantly in a few focused themes at a time, wherein structural transformation is underway, which translates to high growth for the underlying businesses. Themes like manufacturing, infrastructure, energy, defence and allied sectors are the ones where visibility is high and the runway for value creation is long. This portfolio has concentrated investments in high-quality businesses only in these themes.

BT: Why have you given 31% weight to engineering in the Lighthouse portfolio?

Bansal: Currently, we believe sectors with a lot of government policy action, like the ones highlighted, are witnessing deep and large changes that will last for a long period. The Lighthouse fund is focussing investments only in these sectors. Engineering companies are one of the best ways to play these themes, given strong moats, asset-light business models and solid management.

BT: How do you see valuations of the overall market?

Bansal: Valuations are no longer cheaper. However, that may be largely true for equities as an asset class globally. While historical valuations are one aspect to be kept in mind, there could be other important influencing factors. The narrative for India has never been as strong, especially in a relatively global context; India remains amongst the few large markets with robust earnings growth over the next few years. The liquidity environment is buoyant globally, and domestic participation in equity markets is increasing. We continue to suggest a disciplined investing approach focusing on long-term returns.

BT: Which factors will drive the market going ahead?

Bansal: On the domestic side, markets may be focussed on monsoons, the government’s reform agenda, improvement in the demand environment, especially in rural areas and pick-up in the private sector capex cycle. On the global side, key monitorable events would be the US elections, geo-political conflicts, and the Fed interest rate actions.

BT: Can you highlight a few risks that may drag the market down?

Bansal: Most of the key risks could emanate from global factors like geopolitics, the high-interest rate environment, and weak global growth.

BT: Which pockets are looking attractive to your post-Budget? Why?

Bansal: Capex continues to be an interesting theme as allocations and growth rates of the Interim Budget have been maintained. Also, government ordering activity is likely to pick up now in addition to the impending private sector capex cycle from the second half of the year. Addressing the need for job creation structurally, the government has enabled the creation of productivity capacity and capability, which bodes well for manufacturing and consumption in the medium to long term.