'Going in and out of the market does not add any value'

'I started investing in 1985 and don't remember trying to time the market ever.'

'My portfolio took a hit during the 2000 and 2008 market crashes, but at the same time I was fully invested at the bottom levels in 2003 and 2009.'

'Luck may favour you sometimes, but would similarly go against you at other (times).'

"Chasing sectors which have reported strongest earnings is not always the right strategy for outperformance," Prashant Khemka, the founder of WhiteOak Capital Management, tells Abhishek Kumar/Business Standard in an interview.

Overseas investors have turned strong buyers of Indian equities after a period of sell-offs. What reversed the trend?

This is due to two factors. Firstly, the appetite towards emerging markets (EMs) has improved compared to last year, led by China.

The country has done away with the 'Covid-zero' policy.

Coming to India, the valuation discomfort is not as acute as it was six months back.

Fundamentals of the Indian market also remain attractive.

The market has run up a fair bit in the last one month. Is it time to book profits?

The market is currently trading at a valuation of 19 times its 12-month forward price to earnings (P/E) ratio, which is at a small discount to what the market multiple has been under the Modi government (average multiple being around 21x).

Compared to a long-term average P/E of 18, the current P/E multiple is slightly higher.

Overall, the valuations are at a reasonable level and do not call for any extraordinary caution.

Anyways, going in and out of the market does not generally add any value.

I started investing in 1985 and don't remember trying to time the market ever.

My portfolio took a hit during the 2000 and 2008 market crashes, but at the same time I was fully invested at the bottom levels in 2003 and 2009.

Luck may favour you sometimes, but would similarly go against you at other (times) if someone tries to time the entry and exit perfectly.

What are your key takeaways from the Q4 results so far?

It's a mixed bag overall, with some sectors doing better than the rest.

The largest sector, banking and financials, has delivered a strong result.

Large banks are growing at 20 per cent while maintaining pristine asset quality.

On the other hand, several IT companies reported softer than expected numbers.

Given that they serve a lot of banking clients globally (BFSI accounts for 40-50 per cent of the revenue), the turmoil in the banking sector in the US and Europe has led to some pain for the sector.

Given the rising recessionary probabilities in the developed world even other sectors are in a cost cutting mode, leading to demand pressure for Indian IT firms.

Banking stocks have seen a significant rally in the last two years. Is there still a possibility of further upside?

First let me caveat that chasing sectors which have reported strongest earnings is not always the right strategy for outperformance.

The market generally knows it already and hence it's usually priced-in.

For example, with the onset of Covid three years back, pharma companies did well initially as they were reporting the strongest earnings growth.

Most investors expected them to continue doing the same but that did not happen.

And by the same logic, the opposite is also true for those sectors that may have reported poor results.

This is one reason why we do not take a top down view on sectors.

The weight of each sector in our portfolios is a result of company-specific stock selection.

It's a result of this strategy that we have found very attractive investment opportunities in private sector financials.

Private sector financial stocks are fund managers' favourite but public sector banks that delivered the best results across sectors in FY23.
Do you see that as a missed opportunity?

You cannot catch everything that goes up, no matter how good you are.

We have historically maintained a low allocation in PSUs and it has served us well in most periods.

Following your investment philosophy is key to doing well as an investor.

This reminds me of the quote from a famous investor, I believe Warren Buffett, that (says): 'You don't have to own everything that goes up, as long as what you own goes up.'