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Strategy: Time to Pivot the Portfolio

Global liquidity tightening has started impacting growth (slowing of PMIs, money supply, etc) after valuations. 

The shift will be seen from de-rating to downgrades. To add salt to the wounds, there is tightening by the RBI adds to woes, risking DII flows and SMID/India’s outperformance to large caps/EM. These lead indicators suggest a time for portfolio reshuffle.

1.      Defensives: Pharma (upgrade), staples fmcg over IT (downgrade)

2.      Consumption: Domestic auto and staples over durables

3.      Investment: Cement  (upgrade) over Industrials , Real estate

4.      BFSI: Private banks/Insurance over PSU banks/NBFCs

5.      Global cyclical: Energy (upgrade) over metals/export auto


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