investment strategy: Kunj Bansal portfolio building guide for this market
With the new cases of Covid in China, let’s start with metals first. Given the harshness of the Chinese administration, there are many concerns about the epidemic in China; and it’s really going to block the production and manufacturing capacity there. Hence its impact on the demand for metals per se. Do you think this is a valid concern for a sector that has been the best performer of the past year?
I would have liked to add another angle. If this happens, if this is the case where China stops or reduces its production of metal and the demand for other products and especially for the steel itself, world prices are expected to rise because China is a big market. of consumption. But that won’t happen and that’s why we saw today’s fix. But setting aside Tuesday’s correction, even though we look at the last few months sequentially, it is well known that steel prices have corrected.
So, yeah, if we add this whole new wave Omicron three and the China issue to that, then this is where we saw the fix; and it is likely that it could continue. But then the commodities are like that, they make the prices go up and down suddenly in a very short term and in a very short term trend.
An interesting development has been observed with Vodafone-Idea – given that the government is now going to be the biggest shareholder. Obviously, this indicates the company’s lack of confidence in generating income and cash flow for a sustainable period of time. How does it work for retail investors?
It was contrary to my expectations and with the disclosure that I bought Vodafone shares on correction. With this government becoming an interested party, the survival of the company which at one point seemed in question probably does not remain so. Also, I think what could happen now is that there could be a new capital increase in the company in which the government is unlikely to participate. The promoters – both existing Vodafone and Birla Group – could and should participate. There might be money available from other global institutional investors who might want to invest the money. It is an oligopolistic market in India. It is a growing market.
Finally, we have seen, for a year and a half, that the rates are also increasing. Regulatory support has arrived and legal support has arrived. We can clearly see this in the ARPU of the three players that they have increased. Data consumption has increased. The whole trend has shifted towards more and more online work and digitization.
Let’s talk about proven names. How do you see this bullish movement in the market?
I think that in terms of the portfolio approach, it will take a mixed approach. One, yes, of course, to keep the wallet safe you have to stick with what has been proven to work. This comes at a premium. Obviously, to give your portfolio an alpha boost you need to move on to the next round of actions, but the quality of the company, the credibility of the business promoters are not in question.
Second, regarding the gains, there is not too much uncertainty. Some uncertainties will always be there, but it shouldn’t be too much. So that’s where the security and the alpha of the wallet will come from. This is the approach I would take in today’s market.