Dipan Mehta, Member, BSE & NSE is of the belief that the retail investors currently seem to be a bit confused because on one hand they hear about positive news and developments within India but on other hand the market keeps correcting on back of FII outflows and global negative newsflow. Therefore this confusion is basically preventing retail from going aggressive into equities.
However, long-term investors don’t seem to be perturbed by the market fall because the quality stocks haven’t corrected, says Mehta in an interview to CNBC-TV18.
According to him globally if the markets and commodity markets form a bottom then one may see renewed buying interest from the local investors both retail and HNI.
The action currently is in midcaps, which will remain so for next 12-24 months as well, says Mehtra. Although industry is not showing growth there are several pockets within midcaps that are showing visibility, growing topline, bottomline at 15-25% compounded and gaining market share. Investors want to chase growth because they want returns that are higher than inflation rate, interest rate or the debt market, he adds.
For a lot of investors the proportion of midcaps in their portfolios has gone up from 25 to around 50-70 percent. However, one has to be careful while investing in midcaps but one can surely look at quality blue chips instead of well known name in Sensex and Nifty.
From earnings perspective, Bajaj Finance was an absolute shocker with is stellar set of numbers. Mehta believes the companies business model, focus on consumer lending, new technology and aggressive management is paying off compared to other peer companies that are faltering. He expects the company to become more valuable than the flagship Bajaj Auto Company by the turn of the century
The stock at current levels around Rs 6379 is at new all time highs and Mehta expects it to appreciate further.
Meanwhile, he is not so upbeat on the frontline companies because by and large Sensex, Nifty stocks haven’t delivered - so one cannot invest in companies growing below 10% like a lot of technology companies, banks, MNC FMCG etc where there is hardly any growth coming through with few exceptions like Maruti and HDFC Bank.
Disclosure: Bajaj Finanec is part of core holdings of our own investments and our clients
For more on his stock specific ideas, watch video