Expectations of further improvement in economic activities along with the possibility of a vaccine sometimes by end of 2020 or early 2021 has led to the rally becoming more broad based recently. While we see continued momentum in sectors with strong revenue visibility like IT, Pharma and Telecom, beaten down sectors like aviation, hotels and retail have also started out performing the markets. We expect the recovery theme to play out over the next few quarters and are adding Chalet Hotels, Inox Leisure, Hawkins cooker and VIP industries to the portfolio. These companies belong to the worst impacted sector but are market leaders with strong business franchises and available at prices which are significantly below their pre Covid levels.

Market rally has become broader based due to positive news flow on vaccine and expectations of continued economic recovery due to pent up demand and further opening of the services sector. While we expect that cyclical and beaten down sectors will continue out performing markets for some more time we believe that one should take a stock specific approach and buy into the leaders in the sector which have strong business franchises

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