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Here's why one should be a regular, long-term investor, says Kotak AMC’s Nilesh Shah

Updated : March 25, 2020 11:39 AM IST

One will have to look at the consumption space for investment because it is an all weather sector.

Try to navigate your portfolio towards bigger and quality names. That will be the opportunity in financial services space right now.

The current scenario might be once in a lifetime opportunity for a long-term investor. It is a great time to buy equities and be a regular, long-term investor, said Nilesh Shah, MD, Kotak Mahindra AMC.

“Many of the bluechip companies are trading below book. Undoubtedly, next three months are uncertain and challenging, but in the company’s life cycle of 50-100 years, three months is not going to make a material difference,” he said in an interview with CNBC-TV18.

However, Shah is of the view that one needs to avoid the microfinance space. “In the financial services, the sector where one will have to be extremely risk averse is microfinance. There the collection efficiencies could come under serious trouble as the days pass by,” he said, adding that big banks will become bigger given flight to safety.

“There will be flight to safety in these uncertain times, there will be flight to quality, and hence big banks will become even bigger as they get deposit market share. So, try to navigate your portfolio towards bigger and quality names. That will be the opportunity in financial services space right now,” he said.

When asked about equity inflows, he said that domestic investor flows have sustained but there have been occasional redemption in debt funds. “So far the data that we have for first 21 days of this month is that the equity flows by and large have maintained the pace. There has been a fair amount of sustainability of flows courtesy SIPs but a lot of credit should go to mutual fund distributors who have been holding out their customers,” Shah said.

Speaking about the bond markets, he said that there is a complete dislocation in the bond markets and an intervention from RBI is necessary. “This is a problem where dealers are not able to reach offices, banks are focused on merger and completing that process. There is a disruption and dislocation, which we need to tackle before it goes out of hand,” he said.

Sector specific, Shah said, “One will have to look at the consumption space for investment because it is an all weather sector. This quarter probably numbers will look good as people are stocking up. More importantly, most of the FMCG companies will have uninterrupted business as they form part of essential services sector. So, definitely telecom and consumption are sectors where one will be looking at.”

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