Key Points
We have seen the changes that have happened in terms of the consumer preferences playing out in autos, in housing..
Jain also says: Right now, with the way markets are poised, it is more of a bottom-up strategy where we are not focusing as much on the index levels, we are not focusing as much on sectors as we are individual ideas which are more bottom-up driven where we are focusing on risk versus reward, valuations versus growth...
But if you look at the urban consumption, if you look at the top end, the luxury, the premiumisation story, that continues absolutely unabated and that just shows how affluency has continued to rise and sustain at the peak levels right at the top end of the level, talking about the top 1, top 5% sort of a population base..
But other than that, when you look at the risk reward and the balance between banks and NBFCs in the coming cycle, in the next one, one-and-a-half, two years, from an asset quality perspective, capital raising perspective and deposit mobilisation, NBFCs in general we find are much better placed as compared to banks which may have pockets which are absolutely price to perfection and very minimal upside surprise left in them from this point in onwards and that is why the inclination more towards NBFCs which can be a leverage play on consumption, on housing, several sectors, and yet give you that flavour of the BFSI...
Of course, valuations are now looking like a little stretched because of the run up that we have had in the midcap and the smallcap space which is where traditionally our portfolios have been kind of oriented towards, we have had between 60% to 70% run up in that space and that is why the shift in the strategy which is going to be about trying to reorganise the portfolio wherever we feel that the valuations are at one standard deviation above from the long-term average and start booking a little bit of profits over there and redeploy the same money into stocks which are a little cheaply priced...
