Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
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From the CIO’s Desk

Blog Blog Details
  • April 06, 2020
  • Manish Sonthalia|
  • Associate Director, Fund Manager AIF & PMS

The global risk off trade and a mass exit button pressed by global passives have little regard for valuations and fundamentals. The pace of events and uncertainty surrounding them have made the situation extremely fluid. The pandemic being an ‘unknown-unknown’, it is early to guess the impact on GDP growth or the economy. Having said that, I have always maintained that my portfolios are roughly one third in Banking and Financial Services (BFSI), one third in Consumer (Discretionary and Staples) and last one third in other sectors.

Within the last bucket covering non BFSI non Consumer, investments are mainly in the Information Technology (IT) and Pharmaceutical sectors. Within BFSI maximum allocations are to Kotak Mahindra Bank Ltd., Bajaj Finance Ltd., Max Financial Services Ltd., City Union Bank Ltd., AU Small Finance Bank Ltd., ICICI Securities Ltd. and Federal Bank Ltd. The portfolios have investments in key consumer staple companies viz. Glaxosmithkline Consumer Healthcare Ltd., Colgate-Palmolive (India) Ltd. and Emami Ltd.

The portfolios also own consumer discretionary names like Godrej Industries Ltd., Voltas Ltd., Blue Star Ltd., TTK Prestige Ltd. and Eicher Motors Ltd.

Within IT sector our picks are Tech Mahindra Ltd., L&T Technology Services Ltd.

Within the Pharma sector the investments are in Ipca Laboratories Ltd. and Alkem Laboratories Ltd.

As per current available information, barring discretionary spend, most of the above sectors are either unaffected or stand to gain in the current environment.

The key attribute about these portfolio stocks is that most of these companies have zero leverage which is the need of the hour. Near zero leveraged companies with good managements and structural businesses will perform better in most environments and more so in the current risk averse environment.

Economy will in all likelihood come back in 3rd and/or 4th quarter of FY21 depending on how long the lockdown is; but within less than a week the entire market capitalization is down over 35%.

One should not tinker with anything till there is some indication of the length of the corona virus problem. Performance of the portfolios also indicates something like that. In relative terms all portfolios are doing better than underlying benchmarks.

The key message is that investors should hold on. Volatility is an inherent trait of equity markets and sometimes it can be highly pronounced. It is important to remember that equity returns are non linear and reading too much into short term movements is avoidable.

This article has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact. The Stocks mentioned herein is for explaining the concept and shall not be construed as an investment advice to any party. The information / data herein alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. All opinions, figures, estimates and data included in this article are as on date. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.

Relative Performance
*NTDOP= Next Trillion Dollar Opportunity Strategy; IOP= India Opportunity Portfolio Strategy; IOP V2= India Opportunity Portfolio Strategy V2; BOP= Business Opportunities Strategy

Source: MOAMC Internal Analysis; Portfolio Strategy Performance data as on 27-03-2020. Returns below 1 year are absolute and above 1 year are CAGR.

Disclaimer: The above strategy returns are of a Model Client. Returns of individual clients may differ depending on time of entry in the Strategy. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Strategy returns shown above are post fees & expenses. This article has been issued on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Readers shall be fully responsible/liable for any decision taken on the basis of this article. Name of the PMS Strategy does not in any manner indicate its future prospects and returns. Investment in securities is subject to market and other risks, and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services will be achieved. Please read Disclosure document carefully before investing.

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