Stocks Portfolio Allocation: ETMarkets Smart Talk: Planning to invest Rs 10 lakh in market? Try Dipan Mehta’s sectoral allocation

What is also not priced is an escalation of the war and spike in crude oil to beyond $110. Investors will watch out for such events as they increase exposure to equities.

After the recent correction, benchmark indices are marginally away from respective record highs? How do see valuation stack up when compared to other EMs?
India’s valuations cannot be compared to other emerging markets – our diversity, quality of companies, corporate governance standards, and most important the size and scope of opportunities are unparalleled.

Also, the demographics of the country, the size of the economy and the political stability is not generally present in other emerging markets so investors should not indulge in such comparisons – its like missing the woods for the trees.

What is your take on the September quarter results which have come so far? Do you have more downgrades than upgrades in the forthcoming quarters?
The result season has shaped up well so far and the key takeaways is that margins are normalising, demand is steady at least until the festive season, capex cycle is strong and infra build-up is scaling up well.

There are no major disappointments but there is the trend of stock prices correcting even on good financial reports; perhaps because expectations are high.

Also, we are in the beginning of the earnings season and the bad news generally comes towards the end.

Rupee has been all over the place. A lot has been talked about depreciation and appreciation. Where do you see the currency headed? And, does it also mean that firms with high dollar debt will be under pressure?
We should avoid companies with high foreign debt – that is a no-brainer. About the Rupee trend; this is a difficult call as we are globally in unchartered territory as far as currency movements are concerned.

Which sectors are you bullish on and why?
Banks as this is the golden period for them with decent demand for credit and declining credit costs as the NPA cycle is benign.

Next is auto, which has been a multi-year underperformer due to many external challenges and regulatory changes but due to pent-up demand, higher urban spending, and underlying industry fundamentals are driving volumes.

Material prices and semiconductor shortages are in the past and the next few quarters should be the best ever for the industry.

That apart, we are positive on select platform companies not new age digital but established ones like

, , , Rategain Technologies, and MapmyIndia

If someone wants to invest say Rs 10 lakh in Samvat 2079 what should be his/her portfolio asset allocation strategy and why?
35-40 % in banks, 15 % in midcap software, 15 % in auto, 15% in profitable platform companies, and 10 % in new-age digital companies

Diwali adds glitter: 39-tonne gold worth Rs 19,500 crore sold this Dhanteras, up 30% YoY. Households are still tempted to invest in Gold vs equities. Or it would be wrong to equate the same as both are for different purposes. What are your views?
Gold has been a major disappointment and is no longer a safe haven when there is economic turmoil or geopolitical crisis.

I would advocate zero allocation to gold as an investment class. It is good for jewellery and nothing else. Let’s not compare Gold with Equites; there is no comparison

How should one play the small and midcap space?
Selectively. In each industry, quality midcaps that have a niche, agility, aggressive management, or company-specific strengths should do very well and provide good outperformance.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)