“Stock market bottoms out before the economy bottoms out,” Mukherjea said.ETMarkets.com|Sep 12, 2019, 12.29 PM ISTBCCLThe market maven sees only a gentle recovery in the economy at the beginning of next year. NEW DELHI: It is difficult to call a bottom for the domestic equity market, but it’s about time for investors to go bargain hunting, says Saurabh Mukherjea, a top Dalal Street money manager.
“Even if you feel there is still risk in the air, you should go bargain hunting” said Mukherjea, whose venture Marcellus Investment Managers handles assets worth over Rs 350 crore.
Mukherjea said softening steel and rubber prices amid falling cost of bank funding and a depreciating rupee are suggesting that the economy would bottom out in the next six months.
“Stock market bottoms out before the economy bottoms out,” Mukherjea said, adding that this is time to build high quality portfolios to create value over next 4-5 years.
He said September quarter earnings growth would be worse than June quarter owing to weak demand. However, overall growth will be better in the second half of FY20 compared with that in the first half.
“The drop in raw material cost is punchy. If banks start cutting rates and the currency moves to mid-70s, then the economy will start firing on all cylinders. We will see signs of recovery early next financial year,” he said.
The market maven sees only a gentle recovery in the economy at the beginning of next year. “We had 2-3 quarters of economic deceleration. From that perspective, a V-shaped recovery will be a miracle,” he said.
From the stock market perspective, he sees many companies with attractive valuations in the midcap and smallcap segments. He advised investors to look for select auto ancillary and pharma plays with strong balance sheets. He said he was also zeroing in on select commercial vehicle manufacturers.
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