It’s time to adopt a positive attitude towards markets. In an interview with MintGenie, Santosh Singh, Fund Manager, Motilal Oswal Asset Management Company explains how the market is giving significant opportunities to make money at a lot of place
Q. Quick correction usually follows a short and steady bull rally. The market is expected to shift sideways soon. How would you decide your next stock pickings then?
Our stock selection is always based on the same criteria, i.e., buy quality stocks with growth in future and significant longevity of business at reasonable prices (QGLP). Hence, it’s not going to be different as of now. I would think that the market is giving significant opportunities to make money at a lot of places and we are looking at the stocks which can pass our QGLP filters.
Q. Asset management companies are queuing up with new fund offers. Investors seem to be optimistic. Do you sense increased participation in the equity market now?
Every pullback after correction in recent times has been followed by increased participation. I would expect the same to happen again. The market has priced in most of the negatives over the last six months and unless we are going to see another black swan event I would expect the participation from both FIIs and DIIs to increase.
Q. Do you think today’s midcaps and small caps have the potential to turn into large caps tomorrow?
I think a lot of these small caps can convert into mid-caps and mid-caps into large caps in the coming year. The hallmark of a strong economy is this transition. We seem to be on a strong footing and with a lot of global negative news already absorbed by the market and the economy, this conversion may start sooner than later.
Q. Though investors are optimistic regarding market performance, are you expecting small hiccups soon under the effect of inflation?
Although in my view the inflation would remain high, the speed of growth in inflation would not be high, given action by the global central banks. Also, the geopolitical tension is still high but it’s already at the base. Unless we see a new geopolitical flare which I think is difficult but not impossible, we may not see inflation being the reason for the hiccup. If any hiccup it would be due to something which we can’t see today.
Q. Assuming a normal monsoon in the coming months and falling crude oil prices like now, how much time do you think will it take for the inflation effect to cool off?
Assuming no new event driving inflation upwards, I would expect in the next six months inflation should start cooling off as it would have already become part of the base.
Q. Do you really view the current market situation as bearish or just a minor temporary hiccup to an emerging bull market?
I think this is a temporary hiccup as the economy remains strong. I think it’s healthy that we went through this correction as it would provide fresh energy for the next leg of growth in the market.
Q. Europe is gradually drying up, thus, hinting at possible food shortages. Gas shortages are leading to increased demand for coal for power generation. How do you think these will affect the market in the medium term, say, in the coming five to six months?
Europe is going through a crisis which they created over the last year. Everyone was impacted due to that for some time. However, history tells us that when backs are to the wall humankind has been able to find answers to difficult questions and I do not think it’s going to be different this time. However, from our market perspective, I would believe that other than the exporters to Europe we may remain insulated.