“When these kinds of crises come and go, the good news is that this time around, the Indian economy and micro fundamentals are much stronger than in past crises. That at least gives you added comfort,” Khemani said. “But definitely, like I always say, good price and good news do not come together. So, whenever there is good price, it is accompanied by some bad news, which is what it is today. Also, one needs to see that the long-term terminal value of equities does not get changed because of short-term movements, and that largely determines equity valuation. Hence, any such aberrations are generally, unless they are expected to put a permanent dent on any business, an opportunity to buy.”
When asked where investors might find attractive buying opportunities, Khemani highlighted sectors closely aligned with the domestic economy. “Look at banks, which are completely aligned to the domestic economy. We have seen good corrections because of this event. I know that temporarily, there could be some impact on one quarter’s profitability, but they do not change anything on the business. Consumer sectors and consumer sentiment can also change in the short term, with some dents in margins here and there, but structurally it does not change anything. Even the pharmaceutical sector, which is quite defensive in these times, ends up seeing flows coming through. So, usual domestic economy-aligned sectors where you are seeing large corrections due to this situation are opportunities to buy.”
On the divergence seen within the banking segment, with some large private banks under pressure while public sector banks (PSBs) offer valuation comfort, Khemani said: “We actually like both PSU and we recently owned some PSU banks as well. Historically, we have always been bullish on private banks, but in the last couple of years we have been more positive on PSU banks as well because there is clear value, and they have been delivering good growth in the last three-four quarters. So, we continue to remain balanced in both segments.”
As markets continue to digest global and domestic uncertainties, Khemani’s advice underscores a long-term perspective: short-term volatility can present buying opportunities in fundamentally strong sectors.
