What is the sentiment you are finding for the markets right now given that we are in for a topsy-turvy ride in the market, one day up, the other day down and earnings are making a big impact. What is your view on the markets right now?
Deven Choksey: We are experiencing portfolio shuffling at every investor level. The mutual fund players have been shuffling their portfolios significantly. Those companies which are quoting at significantly high valuations are finding reason to exit them because the growth rate is not matching those valuations. So, some of the midcap companies particularly and the smallcaps are also equally included. They have been shifting out from those and taking the gains into the pocket and at the same time, buying some of the underperforming companies with a target appreciation going forward.
We are experiencing a complete shift at this point of time and that is probably why the market is remaining volatile. Though the fundamental prospects of the business remain convincing, maybe the growth rate is not as encouraging as the valuations they are currently quoting at, in most of the cases. That is why we are seeing a disappointment in the stock price. Maybe the market needs to adjust itself on the valuation premium that it has given to various stocks.
What do you make of the IT space right now? That has been a big laggard in the markets of late, but we saw a bit of a jump up in yesterday’s trading session. Is it just a dead cat bounce or do you believe that given the underperformance and the suppressed valuation, it is really a case where one can relook at the IT stocks?
Deven Choksey: The understanding is that the higher valuations where the profit is booked and the amounts realised is now getting into some of the safer valuations and probably some of the IT companies as well even though the fundamental shift has not yet happened in which they start receiving larger part of the orders, etc.
Given the kind of turbulence that we are experiencing at the US end, I believe that the approach still is to buy some of the good quality companies which have got the visibility of order executions that they already secured in the past and that part is possibly driving these companies’ buying interest into the portfolios. I do not think that many things have fundamentally shifted or changed at this point of time.
Maybe the expectations are running high that some of the good quality IT companies would bring in the larger orders and that would create higher business visibility going forward in the next three-four quarters. So, maybe too much importance at this point of time is being given to the technical aspects of the price chart of many IT companies and people finding buying interest emerging into the stocks at lower levels.