Risk-reward has improved; Indian economy structurally more resilient: Rishabh Nahar of Qode Advisors | Stock Market News

Rishabh Nahar, Partner and Fund Manager at Qode Advisors, emphasises that equities remain the highest-returning asset class over the long term. He, however, adds that the risk capital deployed in equities should have an investment horizon of at least five years. In an interview with Mint, Nahar shared his views on the Indian stock market, the Indian economy, and explained Qode’s “all-weather” investment philosophy. Edited excerpts:

How do you see the current market structure? How should investors factor these into their strategy?

At Qode, we invest in equities with what we call “perpetual capital”, capital that is committed for a minimum of five years.

The moment you extend your investment horizon to that degree, much of the short-term noise, geopolitical uncertainty, macroeconomic volatility, and headline risks begin to lose their significance.

Markets have always climbed walls of worry, and this cycle is no different.

On valuations, we are not yet in deep value territory, but we believe the risk-reward has improved meaningfully enough to begin deploying capital into equities.

Is the current geopolitical crisis resolved?

No. But we are likely closer to the end than the beginning.

What gives us greater conviction, however, is the bottom-up picture: a significant number of fundamentally sound businesses are down 30–40% from their peaks, not because their underlying earnings power has deteriorated, but because sentiment has indiscriminately dragged them lower.

That is precisely where genuine long-term value resides, and that is where we are focused.

Is this the right time to trim exposure to equities and explore alternative asset classes?

Our view is unambiguous: equities remain the highest-returning asset class over the long term.

The empirical evidence across decades and geographies is clear. No fixed income instrument, commodity, or alternative asset class has consistently outpaced equity markets over a 10–20 year horizon.

That said, the “All Weather” framework precisely eliminates the need to make such binary allocation calls.

If markets rally from current levels, our portfolio is designed to capture 80–90% of that upside.

If markets remain range-bound or fall further, the portfolio’s non-correlated components will provide meaningful protection and relative outperformance.

This is the beauty of a systematic, multi-asset approach.

We are firmly against trimming equity exposure purely in response to short-term anxiety.

Risk capital deployed in equities should have an investment horizon of at least five years.

Below that threshold, timing becomes the dominant driver of realised returns, and that is a game very few investors win consistently.

What is Qode’s “all-weather” investment philosophy?

The philosophy is rooted in a simple but powerful observation: equity markets are inherently cyclical.

Bull markets are followed by bear markets, and the returns are never linear.

Conventional wisdom tells investors to buy equities when they are cheap and sell when they become expensive.

But in practice, timing the equity market with any consistency is extraordinarily difficult, and missing just a handful of the best trading days can dramatically impair your long-term returns.

So the question we asked ourselves was this: what if we didn’t want to time the market at all, but still wanted to manage the volatility and drawdowns that come with being fully invested in equities?

The answer lay in building a portfolio of genuinely non-correlated assets.

Gold, for instance, often moves inversely to equities during periods of stress.

Within equities itself, factor diversification combining value, low volatility, and momentum provides another layer of resilience.

At any given point, one or more of these assets is working for the portfolio, cushioning the blow when equities correct.

The result is a smoother return profile with meaningfully lower drawdowns, and over a full market cycle, that smoother compounding translates to benchmark-beating performance.

Is your current asset allocation driven by models and signals, or by a static all-weather philosophy?

Our all-weather strategy is anything but static. While the philosophy is anchored in the principle of building a resilient, multi-asset portfolio, the actual allocation weights are continuously recalibrated by our quantitative models, which process a wide range of factors including momentum, volatility regimes, correlation dynamics, and macroeconomic signals.

The core objective of this strategy is not to maximise absolute returns in any given quarter.

It is to manage portfolio-level risk, specifically to control downside deviation.

We would rather deliver consistent, compounded wealth creation through market cycles than chase peak returns at the cost of painful drawdowns.

The models ensure that as conditions evolve, the portfolio repositions itself accordingly, maintaining the philosophy while adapting the expression.

What is your assessment of India’s current macroeconomic outlook?

Crude oil as a macro risk for India is a well-rehearsed concern, but it deserves to be contextualised with data rather than accepted at face value.

The story here is not one of vulnerability; it is one of a structural transformation that most market commentators tend to overlook.

Let’s look at the numbers. In 2008, India was importing approximately 900 million barrels of crude at close to $140 per barrel, an import bill of around $126 billion against a GDP of roughly $1 trillion.

That was a crude oil burden of 12 to 14% of GDP, a genuine vulnerability.

Today, our economy has quadrupled to approximately $4 trillion. Crude import volumes have roughly doubled to around 1.8 billion barrels, but because our economy has grown so much faster, the burden has fallen to around 6% of GDP.

The absolute dependence has grown, but the relative sensitivity has declined sharply.

The takeaway is straightforward. India today is a structurally more resilient economy than it was two decades ago. Rising crude prices are a headwind, not a crisis.

The medium to long-term macroeconomic outlook remains constructive.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.