How much of a threat do you think the market is perceiving the second wave of Covid to be? Or do you think the market moves have more to do with inflation fears or yield fears?
The most important thing is when a new virus or a pandemic hits, it is a shock for the system and the first time impact is much more than later on. I think it is the same with Covid. We have lived with Covid for the last one year and now there is a vaccination drive across the country. The recovery rate is also higher.
In India, the second wave seems to be only in three or four states. I do not think Covid will hit the market sentiments very badly this time. I would be a buyer in this selloff unless something major comes up from the global markets.
Should one keep their finger on the neutral button or on the sell button?
The macros have been improving. I do not think there could be any major selloff or any major case for a negative sentiment in the country.
What do you think are the ramifications of the Supreme Court verdict? Also anything on in particular?
The first to recover is the banking space as a whole. The current prices provide a golden opportunity in the entire sector. Among these, ICICI Bank is one of our top picks.
The NPA cycle has peaked out and the commentary from the last quarter results show, businesses are almost back to pre Covid levels for banks. I think the valuations are fairly comfortable. We were looking at the 10-year valuations of the most large banks like HDFC, Kotak, ICICI and Axis. They are all trading below their 10-year average valuations. So there is a deep value in the wholesale banks like ICICI, Axis and
The way the cycle has turned and the way the economy has shown improvement, these bankers are going to benefit more. The return ratios are reasonable and the valuations give a lot of comfort. ICICI Bank plus the core business, plus the valuations of their subsidiaries provide a sweet spot for ICICI Bank as well.
One should add ICICI, SBI and
in this selloff.
What is the outlook when it comes to the infrastructure and capital goods sectors? Is there merit within these spaces?
We have seen a decent round of a momentum building up in the infrastructure and capital goods sectors. The way the capex cycle has been building up, the first to benefit from it would be capital goods and infrastructure sectors. Both are interesting plays but one has to be very selective way to look at it because the stocks have run up quite sharply and the valuations are challenging. I would play infra through a large cap like L&T. In infra as well as capital goods, my preferred pick would be L&T.
What is your take on the
We do not cover any of the stocks from the Adani Group so I do not think so I would be able to recommend anything there.
How do you pick up those recovery stocks that will stand out in the next leg of this uptick? Could value stocks outperform?
I have been in favour of the growth stocks and in recent times, growth stocks have done quite well. Overall going forward, in the post Covid era, the sectors which are going to benefit would be the growth stocks. Sectors like auto have been doing quite well. There could be a lot more growth there. Banking we have already mentioned. My personal view is that growth stocks should be picked in such times.