“The situation is much better than what it was four-five months ago, with the midcap index having corrected by almost 20 per cent from the peak, and smallcap index is almost 30 per cent down from the peak. So some of the froth, of course, is gone and there are now good stock picking chances available. One should start nibbling at this segment, picking and choosing the right ones as per your preferences of sector and stocks. Certainly, that extreme overvaluation is gone and there is some fertile ground available now,” Vora said.
Having recovered from its 52-week low of 7,904.90, Nifty Smallcap 100 index is still in the bear grip. Headline indices have also recovered from 52-week lows.
Vora, who handles funds worth over Rs 1 lakh crore in the private insurer, is now more bullish on the domestic consumption theme. “Goods and services both are doing quite well. There is a pent-up element to demand in a lot of things. Even shopping, services, travel and tourism and automobiles, etc, have seen some element of pent-up demand. In automobiles specifically, while there was demand, there were chip shortages and supply issues. Now, those shortages are behind us and the pent-up element is showing up,” he told ET Now.
He said the consumer discretionary theme is benefiting from two things – the demand continues to be decent and commodity price pressures are coming off. However, margin improvement in discretionary, auto, etc, may not show up immediately because of a lag effect and inventory gains.
But structurally over the next two quarters or so, we should start seeing improvement in margins for most of the consumer sectors which are good users of commodities, Vora said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)