For a market where the March correction was justified as a logical and needed correction, it has recouped almost everything lost last month. Do you think markets are getting bloated again?
Pramod Amthe: If you look at the index levels, you are right saying that the recovery has been much bigger than anybody expected. Having said that, there are definitely pockets of stocks which are still down in the high double digits and which you can justify by saying that there have been event-based reactions. But if you look beyond that, there is definitely value emerging in some of the mid and smallcaps rather than the broader index.

What is the view on public sector banks because time and again these stocks have been going up one day and down next. What is the view on public sector banks and are there any top bets there?
Pramod Amthe: We remain very selective in the PSU bank space. Our preference remains with SBI, the big brother in the space and especially considering the deposit mobilisation capability which gives them advantage over the rest of the private sector, where the relative positioning is better for the other PSU bank names.

From a medium term point of view, what is the bet on real estate? Can somebody enter it afresh or is it time to book profit for the people who already had positions there?
Pramod Amthe: Real estate has been one of the best performing sectors for FY24 and considering the type of stock moves and the asset price moves in the financial year, we took it off from our investment theme in the month of February. We stay out of any related either direct real estate plays or even to that extent some of the construction material space including tiles and others where the weakness has been clearly seen versus the new home sales. So, we are staying out of that sector considering that the risk-reward is not favourable at this junction.

What are your thoughts on the entire energy basket along with its ancillaries? Even JSW Energy, the QIP and the way the stock price has moved today is clearly telling us that irrespective of the quantum dilution, it will have an appetite and will find buyers.
Pramod Amthe: Energy has definitely played out a substantial positive momentum in the last more than a quarter as demand growth has been relatively positive except for February where there has been some weakness. But broader parameters like PMI manufacturing continues to scale a new high and the type of new investments expected to revive that power sector continues to auger well in the overall scheme of things.

And there our preferred pick is through the construction names and the pure utility names. Thermax to that extent is one stock where comfort will continue to play via the equipment suppliers.What do you make of smallcaps in particular? I am sure at your end as well, you have been hunting for opportunities. Did you find anything that looks interesting?
Pramod Amthe: Even though we have been cautious on small and midcaps, but we feel the extent of damage which has happened, there are still some names which give us better risk-reward entry points. So, in our high conviction list we released for the month of April we have added three names into the same. They are basically where the valuations are definitely down from the frothy levels of plus one standard deviation to either mean level or below mean. So, the names are like APL Apollo Tubes where we feel capacity will give an earnings boost, both in terms of top line driven and the sales mix improvement, I would say the valuations are back to mean level. We added Spandana Sphoorty in the smallcap basket, where again the concerns about some of the geographical exposure is overdone and we feel again the valuations have corrected pretty handsomely, so we have added that into our smallcap. We initiated on Skipper, which is more on the power T&D space and we added it into high conviction. So, looking at the overall scheme of things, we added three names in this correction in the small and midcap versus one largecap name, Titan.

But what is the view on metals basket?
Pramod Amthe: On metals, we are still concerned. We would like to play the metal space through the raw material, hrough the metals. So, we are positive on NMDC, we are positive on aluminium as a metal versus steel where we are negative. The type of west-led recovery that is happening globally we think is more positive for aluminium versus steel where China continues to produce a large chunk and we have not seen any relief. Hence a run-up in steel is going to be relatively difficult going forward, whereas the raw material iron ore is a better play.

Why are you bearish on metals? The PMI data coming from China, the demand indicators coming from the US, all are pointing to better days ahead for metal demand.
Pramod Amthe: As I said, we are more selective in metals and it is not just about the recovery in China. The extent of steel production in China is still humongous. We do not see any relief from China supplies in the global steel market and hence the benefits for Indian steel companies are going to be relatively smaller. We continue to remain negative on broader steel names, whereas a proxy play there is more for us. NMDC where the prices are moving up and the production continues to favour NMDC versus the other names.