India is a vulnerable market and has a fragile financial system and investors should focus on top quality companies with first grade balance sheet to reduce risk, says Saurabh Mukherjea of Marcellus Investment Managers.

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Talking about worst performance of the Indian market, Mukherjea said: “I don’t think any other large economy in the world has such a fragile financial system as we do. So leaving aside the long standing issue of public sector banks, we obviously had the NBFC challenge for the last couple of years, particularly since the IL&FS meltdown. I think they are a drag on both the stock markets and on the real economy.”

“If we had some earnings growth in overall market for the last 4-5 years, things wouldn’t have been so bad. But the market is not showing us meaningful earnings growth for the last 5-6 years. There is no point in trying to time the Indian markets. I certainly can’t do it. What you need to do is to focus on the first grade balance sheet, the top quality companies in terms of their cash flows and corporate governance,” he observed.

According to Mukherjea, one needs to invest in India in a way that cuts risk. "It is not a country you can take too much risk in the stock market and hope to make money. So insulate you from risks by buying premium quality franchises such as Asian Paints, Pidilite Industries or Marico -- buy these high quality companies, and you will make money in this country, that has been our mantra for long and it worked for our clients,” he added.

First Published:Jul 22, 2019 4:46 PM IST