Why is PPFAS's flexi-cap fund sitting on 20 per cent cash? Raunak Onkar explains.

In the past month, the Indian equity market has fallen by nearly 6 per cent, with the mid- and small-cap indices seeing sharper declines of around 9 per cent. Despite the dip and stock prices coming down from their recent highs, Raunak Onkar of PPFAS Mutual Fund said that companies are still not "reasonably priced" enough to warrant building new positions in the portfolio. He also stated that they would "rather wait and find the right valuation than deploy our entire portfolio", which may explain why the AMC's flexi-cap fund, India's largest active equity fund with assets worth over Rs 87,000 crore, is sitting on cash holdings of nearly 20 per cent. Presently the Fund Manager and Head of Research at PPFAS Mutual Fund, Onkar co-manages five funds, of which the Parag Parikh ELSS Tax Saver Fund and the Parag Parikh Flexi Cap Fund are rated five stars by Value Research. In this interview, Onkar delves into whether the ongoing market correction is expected to continue, which sectors look attractive and if any compelling opportunities exist for the flexi-cap fund to deploy cash. Markets are in a phase of consolidation right now. Do you think the current scenario is expected to continue? What can be triggers for potential recovery? I don't know whether the market is really consolidating because the markets have always been uncertain. Since we all read the same media -companies, financial statements, transcripts and annual reports - we should not assume we have some predictability. So it's not like everybody else will have a materially different insight as to what will change. The most important consideration for any company we examine is whether it can withstand a global shock. For instance, consider the period of the Covid-19 pandemic, during which the severi