Time to cash in on market fears? Porinju has a different strategy

Don’t jump in yet. Investors on Dalal Street must wait and watch at this point. That’s the piece of advice coming from smallcap czar Porinju Veliyath.In an interaction with ETNow after a deep correction in the market, Porinju said investors should not forget that such fearful situations, corrections and crashes have happened many times in the past and every time the market has bounced back. So, it is not end of the world.“This is typical market panic. We have gone through many such corrections and cycles. Every cycle is a learning point for investors. Such fearful corrections have happen in the past and the market has always bounced back from these levels,” said Porinju, MD of Equity Intelligence India.The BSE Sensex lost 2,417 points, or 6.26 per cent, in September, recording its worst monthly performance since February, 2016.Porinju said it is a short-term pain for genuine long-term investors and this painful phase shall pass soon.As much as 90 per cent of the listed companies have been facing downward pressure. Pronju said the fall in stock prices was above his expectations.“We are going through the pain of cleaning up happening in the country. I definitely appreciate the government for cleaning up the system. Even, I underestimated the short-term pain of those reforms,” he said. “We may see permanent loss of capital in some of the stocks,” he said. Asking about the strategy of his PMS, Porinju said he has been in action at this points and is not sitting on cash right now. He said some of his old investors have added additional capital after this correction. “We have been fully invested in the market,” he said.Whatever money is coming in, is getting invested, Porinu said.“I find very attractive valuations, especially in the so-called beaten-down smallcaps and midcaps, but very selectively. The world is moving in a special way, where disruptions are happening and fraudulent companies are getting exposed because of the structural changes happening in the economy thanks the efforts put in by the government to clean up the system. Some of these fraud companies are will go bust; there can be capital loss,” he said.Porinju said the chor companies perhaps had strong balance sheets, and they had very relevant futuristic business models, with outlook for a very profitable future. Even today, some of them are siphoning off money. When that is discouraged, when there is no incentive to remain chor because of the improvement in the corporate governance, some of these can transform and create multibaggers for investors. 66023245 66022480 66004761

from Economic Times https://ift.tt/2NWpIXZ