India has been one of the best-performing markets within the EM pack this year. What are the factors that will help us sustain this premium over peers next year?
India has been one of the best-performing markets in the last one year, driven by the fact that growth has sustained and geopolitically, it has been least impacted. On the contrary, it has been one of the beneficiaries.
To sustain this would be a challenge in the next year, as negative news in the global markets would start to fade out, and, hence, India will have to sustain its growth momentum and maybe even accelerate it.
Where do you see Nifty and Sensex by the next Diwali?
We don’t do forecasts for indexes, however, on an overall basis given the macro situation, I would expect Indian markets to deliver returns similar to EPS growth, as I don’t expect either a derating or rerating of the markets.
There could be surprises on the upside as FIIs have been a big sellers for a long time and with the markets showing a lot of resistance, they may start to come in.
Do you see any major downside risks for Indian equities over the next one year?
The biggest downside risk can come from earnings. If they disappoint, then we may see a derating of the markets.
Can you list five stocks that are high on your conviction list for the next one year?
I can’t give stock-specific recommendations, however, I can discuss some of the top holdings in my portfolio.
: It’s a holding company of one of the best health insurance companies in India i.e. Care Health Insurance, which is growing at around 40%, and has one of the best profitability ratios. With the concerns on promoters and its lending business waning, we may start seeing realization of significant value.
: The stock is down more than 50% from its IPO price due to concerns on payments business. But this is a unique business model and with the company going for more sustainable and stable businesses, we may see significant value creation.
ZF Commercial Vehicle: This is the largest safety solutions provider in the CV space in India. With recovery in CV markets and content per vehicle going up, this company is in a sweet spot.
Samvardhana Motherson: The stock has suffered due to global concerns and commodity price inflation. With commodity prices in control, we may see margins improving. Also, this has been a beneficiary of bad times and we can expect it to benefit from these bad times again.
Which sectors according to you are likely to underperform over the next one year?
I would think commodities could be an underperforming sector, given the cooling off of prices globally.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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