As we come towards the end of Smart Portfolios’ third season, Vinay Khattar, research head, Edelweiss Wealth Management, talks to Rex Cano on his successful stint with it, his investment strategies and the current market turmoil. Edited excerpts:
Despite negative market returns, your portfolio has soared nearly 50 per cent. How did you do so?
The markets were volatile in the past year. We saw the Nifty scale a high and then drop to a 52-week bottom. However, if we critically examine the market, select consumption, agri and theme stocks have done well. Also, all cash flow-making stocks have done well and we traded extensively in those. In our last interview as well, we stated we were going long on the same sectors – select stocks like TTK Prestige and Delta Corp were our favorites.
Delta Corp and Inventure Growth gave you over 100 per cent returns. What was your investment strategy?
It’s not only in Delta and Inventure that we made huge returns, but also many other stocks where we traded multiple times and made similar returns. We followed a simple policy of taking a market view, going long on good quality and exiting themseat the right time. Also, we remained high on cash (at times 100 per cent) at various times, so as to hedge in bad times.
How far did your investment strategy, of growth and value unlocking, work?
Yes, we are looking at growth stocks very aggressively. In fact, most of our stocks were part of the consumption theme. Going forward, too, we would follow the strategy of going long on agri and consumption stocks. Among other things, we would focus on strong earnings, management capability to capture the opportunity and good future visibility. These things have paid off well even in bad markets. TTK Prestige and VIP Industries are the best examples.
Apart from being an active investor, you also happen to be an aggressive investor, going by your big ticket-buys.
We at Edelweiss are through in the kind of theme research we do and are active in meeting managements and forming a view. Therefore, when we invest 10 per cent in a particular stock, we do not get worried. I believe that if you like a stock and believe in its performance, then one should be fully invested.
What is your view on the current market turmoil? What kind of impact do you see of the US and European debt crises?
We feel there would be continued headwinds for Indian equities, which are largely domestically driven. High commodity prices would continue to remain an area of concern till prices cool. The recent price correction in international commodity markets adds to some comfort but is still an area of concern. The EU had a widespread debt panic in 2010 and this time it is being seen in the US as well. We feel the current fall is primarily on account of lack of confidence in economic recovery and nervousness due to uncertainty about a plausible solution for sovereign debt crisis.
Headwinds in India like high interest rates, inflation, slower growth rate and tepid policy response are majorly priced in. If international markets deteriorate further, these factors would cool off and may well turn into tailwinds. But lack of confidence can be detrimental for stock prices in the short term. It pays to remain in stocks which offer a cushion of earnings visibility, growth and valuation, with some flavour of market interest.