Sanjay Parekh, Founder & CIO of Sohum Asset Managers, which manages over ₹30 crore, says it’s best to approach the market selectively, keeping valuations as the key filter for stock picking.

He sees pockets of froth in midcap and smallcap spaces particularly in some themes like defence and railways. “That is where we are worried and we are clearly going to stay away from such segments,” he said.

While he did not  participate in the Ola Electric initial public offering (IPO), he noted that he is not undermining the strength of these new generation companies.

They are phenomenal companies with great products and great pipeline and definitely very positive. It is just that valuation is a bit discomforting, he said.

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He is positive on auto ancillaries that are participating in the transition toward electric vehicles (EVs).

Sansera Engineering and Samvardhana Motherson International are among companies that appear well poised to benefit from a take off in the EV segment.

Renewables is another theme that he prefers.

He also shared his view on Hindustan Zinc, where he believes the promoters are making all the right moves towards creating value.

The board of Hindustan Zinc has approved its second interim dividend of ₹19 per share.

Earlier, Hindustan Zinc had announced a first interim dividend of ₹10 per share.

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Parekh holds Sun Pharmaceuticals and Aurobindo Pharma from the pharmaceutical space but doesn’t have exposure to the hospitals and healthcare space.

From the insurance sector, he likes SBI Life and HDFC Life.

“We are looking at it very positively to buy at a right price – one of them,” he said.

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