“We should expect flatlining of the frontline indices, maybe some more downside in mid and small, but there will be rich pickings if one were to be willing to look deeper,” he said.
Agarwal advised exploring sectors like financials, chemicals, and manufacturing. Within financials, small banks, life insurance companies, and microfinance institutions (MFIs), which are trading below their book value look interesting.
“These (MFIs) are well-run businesses, they are not overly leveraged, and they have strong promoters. So, there might be an opportunity here. It’s going to be painful. You cannot call the bottom, but over a three-year time frame, there is an opportunity,” Agarwal added.
Also Read: Don’t make these investing mistakes, say India’s small and midcap wizards
Despite these challenges, he believes the situation is not as severe as the 2018-2020 period.
For the entire interview, watch the accompanying video
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