Geopolitical Risks & Investing: Trust MF’s Mihir Vora on Market Strategy
India’s financial markets should brace for a period of restraint, according to Mihir Vora, Chief Investment Officer at Trust Mutual Fund. Speaking to ET Now, Vora suggested that, given the current geopolitical climate and market volatility, “doing nothing may be the best thing to do, frankly, due to the fact that beyond a point nobody knows anything. There are too many moving parts.”
Vora’s assessment comes as investors grapple with uncertainty stemming from multiple global triggers. Although acknowledging the challenges, he indicated that recent market corrections are creating potential entry points for long-term investors, advising a “staggered buying” approach. “Anyone with cash will be king,” he stated, suggesting the coming weeks could present attractive investment opportunities.
Despite recent underperformance, Vora believes the financial sector remains crucial for any potential market recovery. He emphasized that a market upturn “cannot move without financials,” and a swift resolution to current global uncertainties could revitalize the sector. However, he cautioned that a prolonged period of instability could disproportionately impact smaller businesses. “If it prolongs, you could see pain in MSMEs and small businesses, which can trigger a broader cycle,” he warned.
The outlook for consumer spending is too contingent on the duration of the current disruptions. Rising oil prices pose a near-term threat to demand, but Vora maintains that the underlying structural story of consumption remains intact, provided the current situation resolves quickly. “If this lasts long, there can be medium-term damage to consumption. If it resolves soon, the theme remains intact,” he explained.
Early indicators suggest potential downward revisions to earnings expectations. While the Indian economy demonstrated resilience before the recent geopolitical events, continued uncertainty could lead to softening projections. “Some downgrades will happen,” Vora noted, adding that the initial impact would likely be felt by Micro, Small and Medium Enterprises (MSMEs), small businesses, and the retail sector.
Vora advocated for a flexible investment strategy, particularly for mutual fund investors, recommending a “flexicap approach” that allows fund managers to adjust allocations quickly in response to changing market conditions. He also highlighted selective opportunities within specific sectors. In the pharmaceutical industry, he suggested focusing on ancillary plays rather than the highly competitive diabetes drug market, where profitability is uncertain. Regarding the IT sector, despite structural concerns, he indicated that recent corrections may have created tactical opportunities, noting that some stocks have fallen by 30-35 percent.
According to ET Now, a potential India-US trade deal could unlock a surge in Foreign Direct Investment (FDI) and stabilize markets, a point Vora highlighted as having previously exacerbated India’s market underperformance due to delays in finalizing the agreement.