"Gratitude is
usually the secret hope of further favors."
—Francois de La
Rochefoucauld (French, 1613-1680)
Word
for the day
Lodestone (n)
Something that attracts strongly.
Malice
towards none
Everyone gets to retreat
back to barracks.
Indian Army can claim
"We did it". Twiterrati can finally rest claiming "we are
great". Politicians can submit ATR.
First random thought this morning
None of the members of the family of Mr. Bansal were co-accused in
CBI's case.
Why even after 2days no process has been initiated against the CBI
officers who allegedly drove them to death. Usually an FIR for abetment to
suicide u/s 306 IPC is filed immediately on the basis of suicide note.
Is morality again overriding the legality?
Strategy
Based on the assumptions highlighted yesterday (see here), other strategy inputs that I have been sharing
with the readers from time to time through this column, and market performance
of the 1HFY17, my strategy for 2HFY17 and FY18 would be as follows.
It is pertinent to note, there are
some key changes with respect to currency and rate outlook mentioned in my last
strategy outline (see here) shared with readers in April 2016.
The strategy
(a) In the past one year, the government has shown strong resolve to
afford a good deal of autonomy to the public sector enterprises (PSEs) which have
been performing well. However, this resolve is yet to be tested in adverse
circumstances, e.g., fuel pricing autonomy if crude price rise above US$80/bbl;
or autonomy to banks if political considerations require loan waivers or sale
of sick units if unions oppose the move etc.
For
now, despite sharp outperformance of many PSEs, I would continue to avoid them.
The exceptions could be couple of large banks and couple of other enterprises
that may become irresistible due to short term business opportunities. (The
change is from complete "no go" to surgical strike.)
(b) Consumption will remain the dominant theme in my equity investment
portfolio. I would continue to focus more on consumable services - especially
health, retailing, entertainment, and financing.
On
product side, I would continue to focus on aspirational products like lifestyle
drugs, beer, premium liquor, household upgrade (lighting, tiles, plywood),
luxury housing, premium automobile, packaged food (non-basic), etc. (No change
in this.)
(c) Technology & pharma will continue to be core theme in the
portfolio. Focus will remain on innovators, designers, and engineering
services. I would mostly avoid body shops and pure generic plays.
(d) Will begin to accumulate capital goods players (ex power
equipment) and only niche EPC service providers.
(e) Would like to maintain a 5yr duration in my bond portfolio.
(f) Prefer USD exposure over EUR and YEN
(g) Mostly avoid commodity producers except cement.
(h) Lower return expectation from equity portfolio to 9-10% plus 1%
dividend yield from earlier 11-12% plus 1% dividend yield.
(i) Will continue to avoid SME segment companies a and focus on upper
end of the market, mostly BSE200.
Will divulge more in my regular
Samvat strategy note later next month.
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