In a volatile year, these 3 themes could hold sway: Atul Suri

In an interview with Atul Suri, Marathon Trends – PMS, says consumption, commodities and real estate are the three mega themes to focus on this year.Edited excerpts: How big a scare is crude? We are already at 70 plus, there is talk that it could be 80 in anticipation of the Saudi Aramco IPO. How big a worry could turn out to be?I do not know how much of a worry it will turn out to be but I feel that crude is headed much higher. When people felt that crude would be capped at $55-60, you would have shale gas etc, etc, but today it is sitting at $70 plus and the corrections are very shallow. Overbought markets do not give it much correction so the trend is much higher for crude. My call is that crude will actually head towards $90, it is not in the short-term but I am talking about the medium term, you will see corrections in between but crude is headed much higher and that will definitely affect, India’s macros. There are headwinds, there will be a pain point. And also, specifically stocks and sectors. You are already seeing OMCs suffering. Tthese were great performing stocks a year ago but in the last three four months they have absolutely got smashed.I feel that this play or this theme will go further because there are a lot of companies that depend on their inputs or their raw materials based on crude and oil prices etc and so I feel that next they would come under pressure. If there is darkness there is also brightness, with the currency depreciating, IT will do well.So, there will be good and bad but as a portfolio manager, you will have to navigate and be overweight on these themes which I think are going to play out well for the next few quarters. You have to stay out of those themes or places. It is going to be an interesting market, going ahead in the next few months.IT aside, consumption is turning out to be a very large theme in itself. There is pure play FMCG but then there is urban consumption like Titan, Jubilant, InterGlobal, which was up until Friday. What within consumption do you think is going to stand out? What is it that you could still buy and make money in the next one year?Food and food related stocks look very interesting. I know that the whole consumption theme can be spread across sectors, it can also go into two-wheelers and things like that but what I find very interesting are the developments in the food and food related stocks the kind of chart patterns that are panning out there. These are very expensive, but they are also showing special volumes and price moves. There is no sector index to determine that theme. In this consumption space, I find food and food related stocks to be very interesting.What would be your contrarian theme in this market if you are picking any?Real estate. Realty is showing very divergent charts. Clearly the leveraged and less leveraged spaces. The less leveraged space charts are actually very good and when we see the market or we look at real estate or the index it just seems pretty bad but in that there are lot of bright spots. And clearly if you try to figure out that what is common between these stocks where there are brighter moments you realise that it is the level of leverage. So, I feel that if one wants to get into a bit of a contra bet or get into something that is not very popular right now I feel realty is a very interesting space. Again, as I said, for me the theme would be that avoid spaces where there is high leverage because obviously with bond yields where they are going and other issues that are always the risk with leverage you would want to stay out of it but in the less leveraged space there are some very interesting stock specific chart patterns. As I said, it is not fully sectoral in nature but stock specific and as a contra bet or if you want to get into something less popular today, there are some opportunities there.About six, seven months back, in your interactions with us, you said metals was the key sector that and is going to really ride the wave and be the dominant theme. That has gotten challenged of late what with the correction coming in steel prices across the globe. It is also rubbing off on some of the metal stocks back home as well. Do you think these dips are to be bought?They are corrected. The bigger theme is going to be the whole commodity run. We spoke about crude but I also look at charts of metals underlying and you find that they are actually going to be a part of a larger move. The only problem with metals is that they tend to be very volatile and that is why they do not tend to ever look like secular trends, they tend to be very good for traders because you can have a good week and a horrible week and another good week.Going ahead, looking at underlying commodity charts, if one is able to withstand the volatility -- and mind you the volatility is big, those stocks are 5-5%, 7-7% up and down on a dime based on global movements overnight and are very difficult to navigate in the short-term. But I feel that going ahead also metals and the whole commodity space is in an uptrend. Money would be made, but it will be very difficult to draw your inferences based on a one-day or a one-week price move because that is the very nature of that asset class.It tends to be very spiky and volatile but if you give it a larger space to move and you have that kind of time horizon, there would be money to be made in metals. But again, the caveat being that they can be extremely volatile, that is the nature of that beast.

from The Economic Times https://ift.tt/2KpH3U3