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    Expect consumer companies to do well despite coronavirus fears, says Marcellus Investment’s Saurabh Mukherjea

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    Expect consumer companies to do well despite coronavirus fears, says Marcellus Investment’s Saurabh Mukherjea

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    Saurabh Mukherjea, Founder of Marcellus Investment Managers is of the view that consumer companies would perform well despite the coronavirus impact.

    Saurabh Mukherjea, Founder of Marcellus Investment Managers discussing the impact of coronavirus on global and Indian markets said, “World Health Organisation (WHO) has been very clear in saying that most countries will be affected by this, but at a practical level, leaving aside the health issues which are obviously serious, the level of interlinkages between our economy and the western economy is simply not as high as it is in United States."
    "United States is completely at the heart of the western economy and therefore if the US stock market has corrected by 12 percent from its peak, something like a third of that is what we should expect the impact on the Indian stock market,” said Mukherjea.
    Domestically, Mukherjea is of the view that consumer companies would perform well despite the coronavirus impact. “Whether I am buying Nestle today or whether I have been riding Nestle for the last 20 years, the question should be that can one make money on Nestle, HDFC Bank, Asian Paints, or Pidilite Industries (all of which I concede are in our portfolios) over the next one, two or three years. So, unless you believe that babies in India will stop drinking milk and Indians will stop painting their houses and stop using adhesives, I struggle to understand why coronavirus should be a big game changer for these companies over the next 1-3 years,” he said.
    Investors should focus on buying high quality names, he said. "Consistently buy great companies, well-run companies and you will make good money in India. We are human beings, we all get swayed by panics like coronavirus, but if we think about it practically, this is a concentrated panic in the western economy and East Asia. Our economic impact will be modest and potentially, we are beneficiaries if the Fortune 500 companies do a strategic relocation of their supply chains, which I think is likely,” he said.
    On the auto sector, he said, “As we have discussed over the last 6-7 months, the sector has been pulverized so badly that given the fundamentals of the sector, given that governance and accounting quality is far better in this sector than say the financial services sector, many elements of capital goods, real estate and so on, that from a perspective of a cyclical investor this is probably the cleanest of the cyclical sectors from a governance perspective."
    "So, if you are a cyclically oriented person, a cyclically minded person, it is worth looking at the sector closely,” said Mukherjea.
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