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‘Stay invested, even if your investments keep you awake’

The ferocity and the length of the recent stock market correction does not give positive signs but for active investors, it is a sign for you to go deeper into stocks where you have high conviction.

That’s what noted stock picker Basant Maheshwari suggests.

In an interview with CNBC-TV18, Maheshwari, founder of popular online investing community The Equity Desk, said with two dollar-positive events on the anvil — the Fed rate hike and more RBI rate cuts — the divergence in sector performance should become starker with only a handful doing well.

“In such a time, you have to summersault back into your bunker and hide behind the companies that you believe will give you growth,” he told CNBC-TV18’s Anuj Singhal and Ekta Batra.

For him, these companies are — and have been for a long time now — those belonging to midcap pharma and NBFC sectors.

“With drugs worth about USD 86 billion going off patent, volumes will explode. But within that, you should look for niche API companies. Those that have shown a history of performance or where there is a catalyst for growth,” Maheshwari, who has long been bullish on Granules India , said.

For hands-off investors, he advises a safer approach, select safe largecaps — the likes of HDFC and Maruti — which will keep compounding over time, notching up 18-22 percent compounded growth (“these won’t grow three-five times in five years but they don’t have to”).

“But for an FD investor who gets 8 percent pre-tax returns, why not go with HDFC [stock] with 16 percent post tax expected returns,” he says.

But active-stock picker or index hugger, patience is the key.

“Holding safe largecap stocks doesn’t require intelligence but it does require patience. For the average retail investor, one crash and you’re out,” he pointed out. “The larger point is: even if your investments are keeping you awake, stay invested.”

Please watch video for the full interview.

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