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Go buy. This selloff best opportunity to pick value: Taher Badshah

Our job as investment specialists is to buy value, and if value is available on the Street as a result of this selloff, we have to act, says the CIO for Equities at Invesco Mutual Fund.

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Last Updated: Feb 28, 2020, 01.07 PM IST
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Taher Badshah, Invesco-1200
This is an extraordinary event which will lead to an impact on everything; so I do not really think we can hide behind anything at this stage
Four experts; two are saying that they will buy the fall and two are saying that they will not buy the fall. What is your take?
The behaviour in these kinds of things is obviously to buy the fall. These are extraordinary events and in these kinds of things, it is always a little difficult to call in the short run. We know that we have to just give it time; time is the only thing that we have to kind of bank upon. We have to live in the belief that even if near-term things do get worse, they will eventually get better. So ultimately, our job as investment specialist is to basically buy value and if value is available in the Street as a result of this reason, we have to act. So, we would obviously use this opportunity to buy and at least whatever makes sense. I do not really think we are at one level discriminating against anything in the market at this stage. This is an extraordinary event which will lead to an impact on everything; so I do not really think we can hide behind anything at this stage. So whatever makes sense, one should be buying. I would be positive at this stage of the market.

Day after day, we are waking up to a lot more uncertainty with what is happening with the coronavirus, which is why we are seeing this sort of a panic sell off taking place day after day. The question is, will there be more downside for the Indian markets or do you think that it is largely a sentimental or a more psychological factor? How would it really be prudent to buy into the dip given the fact that day after one does not know when it is going to stop?
So, like I said, in these kinds of things, it is always very difficult to predict anything in the very near-term and we have to just give it time. This is something which is beyond anybody’s control. But I would like to think that some of the reactions over the last few days emanating out of many markets, where there have been few cases, seem to be pretty brutal. I do not really think the nature of the fall had to be of this magnitude. But nonetheless, there is a situation of panic today in the market. So that is something that we cannot avoid. I think hopefully India should hold up. We as a country are relatively better placed with regard to the virus as well as probably from an economic standpoint. Still our base case appears to be that we would look forward to better economic conditions over the next 12 to 24 months’ time compared to what we have seen in the prior 12 to 24 months. We have to also understand that if at all we see any positive developments with regard to the virus, the snapback also could be equally fast; so you should know that generally these kinds of things in hindsight always appear to be good opportunities.

Give us a sense then as to how you are looking at the FII flows? The FII flows have remained steady but at a time like this, given the kind of risk off environment there is now to worry, could we see some sort of a massive pullout or flows drying up now?
It could happen. There have been bouts of FII inflows and outflows over the last four to six quarters for one reason or the other starting almost early 2019. We had seen it in February 2019, then followed by the budget and then after the budget and then more recently US-Iran and now because of the virus. Also, probably there could be those kinds of movements because foreign flows into different kinds of markets. Emerging markets are particularly dependent on how the risk aversion levels are globally. So I would not be surprised if it were to happen. But the good part, which we have also been seeing over the last some time, is that domestic flows have been reasonably supportive and over a period, if I were to probably look at this whole FII picture over the last five years, seven years, 10 years, \as our mutual fund industry and domestic fund industry is maturing, the volatility caused on account of FII inflows or outflows is relatively lesser in degree compared to what it used to be in the past.

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