Buy the dips or wait for further correction?

Amit Khurana, Head of Equities, Dolat Capital, says “this market is moving into a zone which is showing signs of correction. Some have played out and some are yet to play out. Keep the requisite levels where one would look to allocate money which is our preferred mode of portfolio allocation and that is bottoms up. That’s what we are playing out for.”

You have been slightly on the cautious side for weeks in this market, but in the last two weeks, a lot of dip opportunities were provided. Did you utilise it or asked your clients to buy or do you still expect lower levels in the coming weeks?

Amit Khurana: There are two ways to look at it. One, you look at the midcap and the smallcap indices and their components; one-third of these stocks have corrected by reasonable double digits in the last few weeks which is what we had called out last month and seems to have played out as per expected lines. But there is still a fair amount of market breadth which has not yet corrected to the degree required and to levels which would make us want to go on in.


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The second way one can look at is to start nibbling into the names which have corrected or which are your preferred picks. Yes, we find that some pockets are now emerging which are worth looking at. But those are very few and far between. So, to encapsulate, I think this market is moving into a zone which is showing signs of correction. Some have played out and some are yet to play out. Keep the requisite levels where one would look to allocate money which is our preferred mode of portfolio allocation and that is bottoms up. That’s what we are playing out for.

What is the colour in the market? What is it that you are looking to buy in this recent decline that we have seen specifically in small and midcaps?

Amit Khurana: We are looking to back up the same names that were there on our list starting last year’s rally, but some of them had become a very rich in valuation. So, it was more of a cool-off. We still like real estate as a theme which we are backing up. We continue to like alcobev as a category, that we are backing up and some of the names while they may have muted earnings for Q4 but we believe structurally India remains a very strong volume growth market and premiumisation market on alcobev so that we continue to back up.

We also believe that some of the pockets which have not performed as per expected lines, will hopefully form cyclical bottoms and give us some opportunity which is related to domestic consumption names. We continue like some of the mid-sized banks and affordable housing and midcap cement, but at a certain price point, as the corrections finally end for that space.

Roy Walsh

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