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<ul><li>Debt-ridden DHFL’s promoters asked its employees to purchase its wealth management arm. </li><li>Swapnil Pawar bought out the India arm of the US-based hedge fund, which he was heading. </li><li>Employees of <keyword id="6358200" type="COMPANY" weightage="20" keywordseo="jet-airways">Jet Airways</keyword> and Reid &amp; Taylor too tried to take control of their companies. </li></ul>The tables have turned as employees of troubled companies are saving them instead of quickly jumping ship. One such rare case is that of Deewan <keyword id="100080" type="DOMAIN" weightage="20" keywordseo="housing-finance">Housing Finance</keyword> (DHFL). The debt-ridden company’s promoters asked the employees of its wealth management arm WGC Wealth <a href="https://www.business-standard.com/article/companies/more-employees-looking-to-buy-out-promoter-stake-in-companies-119062100366_1.html">to purchase it</a>. This is after a debt of ₹1.2 lakh crore mounted and its promoters are keen on selling chunks of the company. Instead of appealing to investors, the company approached its own employees for help who came through. The deal has been closed today, according to a <a href="https://www.business-standard.com/article/companies/dhfl-promoters-sell-stake-in-wealth-management-business-to-employees-119062700505_1.html">report by Business Standard</a>. Yet another financial services company employee Swapnil Pawar bought out the Indian arm of the US-based hedge fund, which he was heading. Pawar who is also the founder of Asqi Advisors, told Business Standard that they intend to set up the company as an <keyword id="138356" type="COMPANY" weightage="20" keywordseo="Asset-Management">asset management</keyword> services firm and expand it. The number of employee groups who are stepping in to save or take over their companies is rising, as is the number of troubled companies. The employees of the bankrupt clothing label Reid &amp; Taylor India too had attempted to bid for the company. However, <keyword id="6354457" type="ORGANIZATION" weightage="20" keywordseo="National-Company-Law-Tribunal">National Company Law Tribunal</keyword> which assessed their bid said that the investors backing the staff were unable to prove their net worth, <a href="https://www.business-standard.com/article/companies/more-employees-looking-to-buy-out-promoter-stake-in-companies-119062100366_1.html">according to reports</a>. The many employees of grounded airline Jet Airways too had tried to bid for the firm, which too has gone into bankruptcy. However, no deal could be reached as the heavily indebted company eventually went into liquidation. Most such deals take place in the financial services sector where employees play a large role. However, India has very few stories to tell where employees bailed their companies out. In 1987, construction major L&amp;T was once a target of a hostile takeover by Reliance Industries headed by Dhirubhai Ambani. Kumar Mangalam Birla was also one of the people who had purchased stake in the construction company, in an attempt to take over his rival in the cement business. As a response, its own employees set up a trust and purchased the shares back and gained control.

Some employees in India are stepping up with investments to save the company and their jobs

The stock markets have been in a buoyant mood ever since <keyword id="6354477" type="PERSON" weightage="40" keywordseo="Narendra-Modi">Narendra Modi</keyword> was named the BJP's prime ministerial candidate on 13 September last year. With Indian voters giving the National Democratic Alliance (NDA) a clear mandate, the markets turned euphoric. On the 16 May, the day of vounting, the Sensex opened up by more than 1,000 points and then breached the historic 25,000 mark. 
 Now that the markets have safely negotiated possibly the year's biggest event risk, <keyword id="6416579" type="UNKNOWN" weightage="40" keywordseo="Retail-investors">retail investors</keyword> need to reformulate their stock market strategy: should those who have been sitting on the sidelines enter the markets now in anticipation of the bull run continuing? And, for those who entered the markets earlier, is it time to book profits in view of stretched valuations? 
 
Cast a fresh eye on your portfolio 
 
Investors with a short-term investment horizon, who have made substantial profits from the current run-up, may encash their gains. "Investors who got in at lower levels should book partial profit and wait for a correction to re-enter," says Vibhav Kapoor, Group CIO, IL&amp;FS. The rationale: the markets have already factored in the positive news and valuations are getting stretched. 
 Long-term investors, on the other hand, may continue to hold on to their investments. "The overall long-term trend is positive," says Kapoor. Adds Shankar Sharma, vice-chairman and joint managing director, First Global: "India's fundamentals are among the best in the world right now, so hold on to your equity investments." Raamdeo Agrawal, joint managing director, Motilal Oswal <keyword id="6354241" type="COMPANY" weightage="40" keywordseo="Financial-Services">Financial Services</keyword>, concurs. "The long-term story is just starting, so investors should continue to be in equities for the next five years," he says. 
 
Adds Andrew Holland, CEO-Equities, Ambit Capital: "Foreign investors are very positive, so the high inflows may continue for a few more months." Events like the Union Budget and important economic policy announcements are expected to keep the markets buoyant over the next few months. 
 
 
 
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Which segment should you bet on? 
 Should you seek refuge in the relative safety and stability of large-caps, or should you aspire for the higher returns that mid- and small-cap stocks can potentially offer? Remember that these three segments rarely move up in tandem. The large caps led the charge when Narendra Modi was anointed prime ministerial candidate. Only later did the mid- and small-cap counters take over from them. The BSE Mid- and Small-cap indices have gained much more than the Sensex since 13 September. This trend may continue in the future as well. The large-cap stocks are gaining again now, which implies that mid- and small-caps may play catch-up later, once large caps enter correction mode. The mid- and small-cap indices are also quoting at a discount to the large-cap index. However, <keyword id="47916" type="UNKNOWN" weightage="40" keywordseo="invest">invest</keyword>ors need to invest in each stock on its own merit, based on its growth prospects and current valuation. "It would not be correct to brand the entire mid- and small-cap segment as undervalued or overvalued. Investors should go company-wise," says Swapnil Pawar, chief investment officer, Karvy Capital. 
 
 
 
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Which are tomorrow's sectors? 
 
With the NDA winning a clear mandate, the surge in economy-related stocks may continue. Enter these sectors whenever the markets take a breather. "We continue to like cyclicals," says Holland. One of the new government's top priorities will be to kickstart the investment cycle by expediting clearances. Since the executive wing of the government is likely to work with a sense of urgency, sectors like infrastructure, construction, capital goods and power are expected to fare well. 
 
Another sector expected to benefit from an economic turnaround is financials. But private and public sector banks will go their own separate ways. The former are expected to increase their share of the market pie. Unlike their public-sector peers, they don't have NPA (non-performing assets) related concerns. An economic recovery augurs well for public sector banks as well since it will reduce NPAs throughout the system. While the resolution of NPA-related concerns may take a few quarters, prices of PSU bank stocks may run up much earlier. 
 The oil and gas sector too is in a sweet spot currently. An appreciating currency will favour this sector by lowering its subsidy burden. Since its low of 68.85 vis-a-vis the dollar on 28 August, 2013, the <keyword id="6355302" type="ORGANIZATION" weightage="40" keywordseo="Rupee">rupee</keyword> has strengthened considerably. While this may be attributed largely to the government and the RBI reining in the current account deficit (CAD), the expectation of a business-friendly government taking over after the elections has also led to the inflow of dollars, which has pushed the rupee above the 59 level. The RBI may buy dollars to slow down the pace of the rupee's appreciation, but the currency may nonetheless strengthen in the short run. The new government is also expected to resolve the vexed issue of gas and oil pricing, which will be another shot in the arm for the sector. 
 
Despite global demand improving, the rupee's appreciation could act as a headwind for IT companies in the next few quarters. If sectoral rotation continues and money keeps on moving out of defensives and into cyclicals, there will be added pressure on IT stocks. Avoid this sector for the time being. 
 
Other export-oriented sectors such as textiles and leather may also suffer on account of the rupee strengthening. The domestic slowdown in China may lead to heightened competition from Chinese exports. Import substitution sectors like metals are also in the same boat. 
 
 
 
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Pharmaceutical, another export-oriented sector, is expected to fare better. While it too will be hit by the currency's appreciation on the external front, the picture in the domestic market is improving. The sector has already put the troubles caused by the drug price control order (DPCO) of 2013 behind it. 
 Cyclical rotation may hurt some of the defensive stocks in the short term. However, the fundamentals of sectors like auto and <keyword id="34523" type="CITY" weightage="40" keywordseo="fmcg">FMCG</keyword> will improve as domestic demand rises. The demand for premium products, which carry higher margins, is expected to improve in the wake of an economic recovery. A stronger rupee will also lower the cost of imported raw materials for many of these players. Try to latch onto some of the reasonably priced stocks in these sectors whenever the markets correct. 
 
Stocks of a few industrial groups, such as Adani, have done well ever since Narendra Modi became the BJP's prime ministerial candidate. Since momentum still favours these stocks, you may continue to hold on to them for the time being.

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Some employees in India are stepping up with investments to save the company and their jobs

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