Rohan Mehta, Founder and Portfolio Manager at Turtle Wealth, believes equity will give double-digit growth this year and believes government bonds will be an interesting hedge against the equity. In an interview with MintGenie, he advised investors that shuffling has never been a smart option. He added that except for the contingency fund, investment in the debt market has no point and that one good quarter can take care of 3 years of debt market returns.
How much equity returns from Indian markets do you expect this year (2023)? Do you see other asset classes (like bank deposits, gold, or debt) giving better returns?
We believe equity will give double-digit growth this year backed by the strong demographics of India and as the world market has settled from all the major worries. We believe government bonds will be an interesting hedge against the equity markets due to the possibility of a correction of interest rates after 6 months.
While the stock markets are trying to recover, it does not seem to be happening for them. What could change this trend this year?
The market always has the tendency to surprise. The market will not surprise without the performance of quarterly numbers. A better world market scenario, backed by FII buying to be a start of a major bull run.
Do you believe valuations of Indian markets are still expensive? Or they have corrected enough to become an attractive ‘buy’?
Now it (the market) is much fairly valued seeing the growth opportunity. The valuations have corrected more than the market should, and that’s where the P/BV and the EPS are more propelling than it was 6 months back.
What strategy would you suggest for investors in this uncertain environment? What should they look for in a stock before buying?
The strategy is simple, stay invested. If you don’t know how to invest, hire an expert or delegate. Every decade there is a new sector and stocks which create extraordinary returns. The decade-back stock won't do it, so you have to find a new opportunity. Don’t be surprised if a new sector or stock starts making a progressing journey, and be with the winners. If IT is not performing, don’t shy off to sell it and if manufacturing is performing, don’t hold yourself off not buying it, that’s where the wealth is created over the decade period. In the end, tough market doesn’t last, tough investors do.
Should investors move away from equity for now, towards debt?
It depends on one's objective; shuffling has never been a smart option. If you are looking forward to the vision of 2030 in investment, except the contingency fund, investment in the debt market is no point. One good quarter can take care of 3 years of debt market returns, but as it is said, your patience will be tested but the conviction will be rewarded.
What is your outlook on the IPO markets this year? Will they be muted like in FY23 or investors will see more numbers of IPOs and better performance of IPOs this year?
IPOs generally come in good markets, but in bad markets, the IPO which comes is very interesting. The promoter must have confidence in the company, only then they will launch an IPO. The company should be watched closely.
FIIs have turned buyers in April now, do you see this trend continuing?
FIIs are extremely smart players; they will come where the value will be and if we perform better in quarterly earnings, foreign investor inflows in Indian equities will surge. But, we should not depend only on FIIs. Our focus should be on domestic investors; while the world is bullish on India, DIIs not so much.
Which sectors should one stay away from this year?
Investors should be cautious about sectors like manufacturing, auto, infra, and PSU.
One piece of advice for new investors.
This is the best time to reshuffle your portfolio. You won't get this time again. One should not just exit or redeem their funds due to poor returns in the near term. In equity markets, returns come to the people who don’t need them right away.