Value vs. growth: what will work for equity investors? BT Digital Diwali Survey decodes

Even though the BT Digital Diwali Survey sees the market reaching new highs at Samvat 2079, a majority of analysts believe that investors are better off investing in a pure ‘value’ style of investing or by ‘buying value’. growth at a reasonable price” compared to the next one. year.

In the value investing style, investors tend to buy stocks that they believe are undervalued. In the growth style of investing, investors look for companies that offer strong earnings potential, but are considered overvalued in terms of valuations. The market looks for growth during the expansion phase while value is more preferred during contractions, said Vinit Bolinjkar, head of research, Ventura Securities.

Analysts favoring a purely value investing style included Shrikant Chouhan of Kotak Securities, Vinod Nair of Geojit Financial Services, Sunil Nyati of Swastika Investmart and Sumit Chanda JARVIS Invest. There were plenty of other analysts fighting for a mix of growth and value. Among them, Surjitt Singh Arora from PGIM India Portfolio Management Services, Siddarth Bhamre from Religare Securities, Deepak Singh from Reliance Securities and Mohit Nigam from Hem Securities.

Read more: Stocks, cryptos, gold and debt: How to invest Rs 10 lakhs, BT Digital Diwali survey reveals

“Growth stocks are preferred by fortune tellers, who can, for example, predict Asian Paints’ ability to be the market leader in the paints segment,” said Deepak Singh, chief commercial officer of Reliance Securities. , adding that value stocks are preferred by market. hunters, who believe that Tata Power, for example, will create a whole charging ecosystem in the future and are trading at a discount.

“As a result, I think people should go for both of these investment styles,” Singh said.

Surjitt Singh Arora, portfolio manager at PGIM India Portfolio Management Services, said he follows the philosophy of growth at a reasonable price (GARP), which is a simple method that has been proven for many years.

“While investing in stocks is for growth, the price to pay for growth is equally important. The GARP philosophy balances the two principles of investing, namely growth and value. Historically, we have seen the Markets oscillate between the extremes of optimism and pessimism, in which we have approaches such as grow at all costs or an excessive focus on price relative to book value.GARP can help avoid extreme overvaluation as well as ‘to avoid value traps,’ Arora said.

Siddarth Bhamre of Religare Broking said Indian markets are attracting investment for its growth and there are many examples where value stocks have languished for a decade. “The current volatility can offer high growth stocks at a reasonable valuation and that’s the space we always try to default to be in,” he said.

Kotak Securities’ Chouhan prefers value. He thinks consumer-focused sectors, both core and discretionary, will outperform the market. He loves banks on reviving demand from individuals and corporate resolutions. Besides, Chouhan likes specialty chemicals, automotive and pharmaceutical sectors. JARVIS Invest’s Sumit Chanda also prefers value, given that interest rates are on an upward trajectory.

Samvat 2078 has been a year of ups and downs with a roller coaster ride in the stock market across the globe. Since last Diwali, the market has seen significant volatility driven by reversal in liquidity, policy tightening, the Russia-Ukraine geopolitical crisis and rising inflation, analysts noted.

Over the past year, said Neeraj Chadawar of Axis Securities, the market has seen a faster rotation of investment style and sector preference and that the value theme dominated the first half of Samvat 2078 which showed a period of rising inflation.

In the second half, however, the market saw a revival of the growth theme, which was led by lower commodity prices, robust domestic demand and reasonable valuation after the market correction.

Sunil Nyati, managing director of Swastika Investmart, said value stocks were seeing signs of recovery after a decade-long underperformance.

“In the event that the indices give a lackluster performance over the coming year, value stocks should attract increased investor interest. Economy-oriented stocks are poised to do well in the years to come and we are positive on sectors like banking, infrastructure, housing, real estate and capital goods,” he said. he declared.

Meanwhile, for Sanjay Chawla of Baroda BNP Paribas Mutual Fund, India has been and always will be a growth market. The value theme will play out in a prolonged downside or sideways phase, says HDFC Securities’ Deepak Jasani, who does not foresee such developments at this time.

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