Thakkar: Range-Bound Equity Markets Are Normal — SkimNews
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- Rajeev Thakkar said equity markets have been range-bound for around two years but the period is neither unusual in duration nor in the magnitude of the decline from previous peaks, arguing that the possibility of higher returns than fixed deposits comes with volatility.
- PPFAS allowed cash in the Parag Parikh Flexi Cap Fund to peak at about 25% during 2024 exuberance; the figure has since fallen to 14-15% and could head to single digits as opportunities grow.
- Thakkar framed the current IT services sell-off as an opportunity rather than an existential threat, drawing parallels to past fears around Y2K, cloud computing and SaaS, and noting AI could create cybersecurity work even as it eliminates other tasks.
- PPFAS holds no direct exposure to pure-play AI model companies such as OpenAI or Anthropic, with Thakkar saying factors like sovereignty, costs per token, data privacy and speed could matter alongside model quality.
- Thakkar defended the fund's private-sector bank holdings, saying the issues reported at HDFC Bank are undesirable but do not appear materially threatening to its franchise or customer base given RBI oversight, diversified ownership and governance mechanisms.
- Valuation gaps between market-cap tiers remain wide, with the Nifty 100 at a P/E of 20.8 versus 30.7 for the Nifty Midcap 150 and 34.6 for the Nifty Smallcap 250 as of 4 August.
- Indian Energy Exchange is a sub-1% position in the portfolio, with Thakkar saying there is no certainty over how long market coupling would take, what form it would take or which market segments would be affected.
Why it matters: Two years of range-bound equity markets have given PPFAS a setup it can now act on: cash in the Flexi Cap Fund fell from 25% to 14-15% as Thakkar deploys into private-sector banks, IT services and small-caps. His refusal to own OpenAI or Anthropic directly shows the fund prefers beaten-down value to the most-hyped trades.
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