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    Worried about fall in markets? Marcellus has some investment tips for you

    market | IST

    Worried about fall in markets? Marcellus has some investment tips for you

    Pramod Gubbi, co-founder, Marcellus Investment Managers, is of the view that the global macro situation is jittery and that the trade war is now "morphing into a currency war".
    "With the trade war now morphing into a currency war and the Chinese currency devaluing, it is impacting the rupee. Moreover, there seems to be uncertainty in terms of global liquidity on the back of conflicting statements coming from the US Federal Reserve and the possibility of the monetary easing cycle not continuing. So all eyes will be on Fed Chair speech at Jackson Hole to get a further sense on rate cuts," said Gubbi, adding that if there are no further cuts, then we could see further downside for the market.
    He said the house has always looked at structural plays in terms of value. “We have had a three-pronged strategy, we are looking at companies with good governance. Second is look for companies which make essential goods because middle-class India will continue to consume a basket of goods and services irrespective of where the trade war is going and whether the Fed prints more money or not," Gubbi said, in an interview with CNBC-TV18.
    "Thirdly, we look for strong competitive franchises which have motes, so the downside is protected because weaker guys fall off the radar and they protect their growth though market share gains and when the recovery comes they are the last man standing and take the whole recovery to themselves. There are a handful of stocks which tick all three boxes and that is what we buy,” he added.
    He said the house is positive on HDFC Bank, Bajaj Finance, Asian Paints, Marico and Nestle.
    Talking about growth, he said slowdown in growth is creating stress in asset quality because there are businesses in the trading community, in distribution, wholesalers who operate on leverage and if growth does not come then their ability to service that debt goes down and they become fresh NPAs although there is no problem with their governance.
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