Uncertainty Calls For A Large Margin Of Safety, Says Nandan Chakraborty Ann Jacob NDTV Profit

As various elements and cues inch uncertainties higher, timing global cues has become more difficult than reading tea-leaves. The winds of volatility hit the broader markets and Nandan Chakraborty, head of strategy at DAM Capital, advices investors to differentiate market signals from noises.

“Signal for market movement is valuation alone and the rest of the movement is noise. There are different stages. Like when the market climbs are wall of worry. And that is when the skies are blue and you don’t see any issues. This is the opposite where there a few known-unknowns like rates and Trump,” said Chakraborty.

Sectors And Concerns

Addressing the IT sector, Chakraborty’s take is clear but is weighed down by concerns.

“My list only has TCS and no other IT stocks. The sector has too many moving parts and uncertainties. The valuations are not in a place where I can take a call. The question is how much more volume will come into India, and that is unknown,” he said. The IT sector is not the only sector that is suffering due to lack to clarity, but also the banking sector, according to Chakraborty.

“First, some amount of regulatory easing that needs to come in. Banking is hit by consumption and capex issues. Consumption issue in the long term is employment due to lack of capacity and the medium term issue is GST. The short term issue was inadequate monsoons,” he explains.

Uncertainties And Strategies

In the global scene, Chakraborty teased that years of learning astrology couldn’t help time events and cues. There are too many risks in timing these elements, according to him.

“There is a Trump factor. There are things out of his control and implementation will take months. Monsoons are also one of the key factors for consumption,” he notes.

There is a specific strategy for all stages and in a stage like this, he recommends that investors need a portfolio with a large margin of safety. Investors also need to ensure they diversify into more relatively stable categories and sectors.

“Invest into schemes with CAGR on the higher end with adequate returns. The second strategy is to have a few large caps that will do well in the coming year. The large caps largely in BFSI, Metal, FMCG and Telecom sectors,” he said.

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. Read more on Markets by NDTV Profit.Signal for market movement is valuation alone and the rest of the movement is noise, said Nandan Chakraborty, head of strategy at DAM Capital.  Read MoreMarkets, Business, Notifications 

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