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  1. IT recovery not in near sight, we are neutral on FMCG: Green Portfolio's Divam Sharma

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IT recovery not in near sight, we are neutral on FMCG: Green Portfolio's Divam Sharma

Swati Verma

5 min read | Updated on August 09, 2024, 18:31 IST

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SUMMARY

"We love the small and midcap space, clearly. However, currently, every other company that we look at is trading at 52-week highs, yet, to support this, the fundamentals of those companies have burgeoned—in most cases," says Sharma.

 Divam Sharma, co-founder of Green Portfolio PMS.

Divam Sharma, co-founder of Green Portfolio PMS.

The August-5 like market meltdown is unlikely; however, one-day shocks will reoccur on a regular basis, says Divam Sharma, the co-founder of Green Portfolio PMS, in an exclusive interaction with Upstox.
The fund manager is neutral on the FMCG sector and is bullish on telecom, infrastructure, and pharmaceuticals space.
Divam Sharma is a chartered accountant, holds an MBA from ISB, Hyderabad, and a Masters in Business Finance from ICAI. He has formerly worked at CitiBank, IMGC, and Kotak Mahindra Bank. Sharma has over a decade and a half of experience in investment management. Sharma founded Green Portfolio PMS along with CA Anuj Jain in 2018
Edited excerpts:
Markets are witnessing multiple headwinds currently. Was the August 5 meltdown one-of-a-kind, or should we brace for more carnage in the coming days?

More carnage is what we wish to see so that more opportunities to invest reemerge. Fortunately or unfortunately, as soon as there is a fall in markets due to macro headwinds (US recession fears, BoJ action, geopolitical tensions), the liquidity sitting on the sidelines arrests that market fall. With ₹20,000 crore coming in as monthly SIP, the selling executed by FIIs is being counterbalanced by DIIs.

More carnage is less likely as a result. However, these one-day shocks will reoccur on a regular basis.

How do you rate the Q1 earnings of India Inc?

The results of Nifty50 companies have been rather strong. If I look at the main sector, which is banking, performance has been stellar. Banking is carrying the Nifty at this point. If you look at IT, which is a major sector in the Nifty index, the results were flat.

What is your view on mid- and small-cap stocks? How should one approach them?

We love the small and midcap space, clearly. However, currently, every other company that we look at is trading at 52-week highs, yet, to support this, the fundamentals of those companies have burgeoned—in most cases. That said, there is still value in some spaces and sectors, but the investor needs to go deep into the value chain to find something worth buying.

Will FMCG stocks shine in 2024? Why/Why not?

I am honestly neutral about FMCG. It’s a good sector for defensive investment; it's perhaps even the “safe haven” of stocks. But it’s a heavily concentrated sector; most of the growth, if you notice, comes from just 2-3 companies, not the sort of performance we look at. However, markets have been severely volatile this year, and FMCG is a good choice for investors who are just starting out or need some stability in their investments.

Tell us about your overweight and underweight sectors currently and why.

Overweight on telecom, infrastructure, and pharmaceuticals. We’ve been enthusiastic about these sectors for quite some time, and it has been interesting to see the turn of events. These sectors have not just ours but the government’s attention too, and we are looking at them with a top-down strategy. We are well invested in these sectors in our portfolios; in fact, some more things are coming up very soon in one of these spaces.

We are underweight in IT and PSUs. We’ve always refrained from investing in PSUs simply due to their dependence on the authorities. IT, on the other hand, has been muted for a long time now, and with heightened concerns about the recession in the US, a recovery isn’t in near sight.

What has been your investment strategy since the beginning of this year, given the heightened volatility?

Our strategy at Green Portfolio is really simple. Stay patient, sit on cash, look out for opportunities, and focus on the fundamentals. We have always been consistent with our strategy. Even now, when the market has been severely volatile for over six months, we are staying calm during the chaos to find good value during crashes. It may seem contradictory, but we look forward to a couple of crashes here and there to be able to take advantage of the best opportunities.

Tell us two Budget announcements that, according to you, will play a significant role in driving India's economic development.

From a broader and long-term perspective, the youth upskilling initiatives are noteworthy. If implemented well, they will surely help the productivity of our labor force, something that’s very much needed even now.

As regards sectors, infrastructure is a personal favourite for me, and the infra allocation along with tourism development ideas would see infra turning even bigger.

A smaller sector that we’re eyeing is shrimp, with new initiatives for financing in the industry, and I’m eager to see how that turns out. Lastly, customs duties being reduced for numerous industrial inputs like those for solar energy, chemicals, etc. is something that industries can really benefit from.

Disclaimer
Investments in the securities market are subject to market risk. Read all the related documents carefully before investing. The stock or sector discussed here is only for educational purposes and not a buy/sell recommendation. Investors are advised to conduct their own analysis and risk due diligence before trading and investing in the stock market.
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About The Author

Swati Verma
Swati Verma is a business journalist with over 10 years of experience. She closely tracks stock markets and covers breaking news related to markets, business and personal finance.

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