Moneycontrol
Dec 06, 2017 06:28 PM IST | Source: CNBC-TV18

Earnings, economic growth to move markets in the long term: Reliance Capital's Singhania

Sunil Singhania remains optimistic about the market in the medium and long term.

Moneycontrol News @moneycontrolcom

The market has been witnessing a correction since November with the Gujarat assembly elections, fiscal concerns due to rising crude oil prices and economic growth worries weighing on investors' minds. The Nifty fell more than 400 points from its record high of 10,490 on November 6.

"In the near term, there are some concerns related to fiscal deficit and apprehensions due to th3e upcoming general elections. But this 3-5 percent correction is always a part of the game," said Sunil Singhania, Global Head-Equities at Reliance Capital.

However, he continued to be optimistic about the market in the medium and long term.

On the Gujarat elections, he said that in case of a really surprising verdict, the market might get a little jittery in the near term.

The recent ABP-CSDS opinion poll indicated that there could be a tough fight between BJP and Congress for Gujarat's votes. The prediction dented market sentiment.

But in the longer term, Singhania feels the market will again start looking at economic growth and corporate earnings.

"On both fronts, we are finally seeing an uptick happening - GDP growth is rising a little bit faster and corporate earnings are coming back," Singhania said in an interview to CNBC-TV18.

Sector-specific forecast

He said on the infrastructure side, there is a lot of action happening in terms of metro, road projects etc.

With Udaan being launched, there will be 18-19 new airports implemented in the next one or two years in tier II and tier III cities. Also, there is action in the irrigation sector, he added.

In the case of real estate, sales are slow but with massive reforms like RERA will eventually mean that it will be a clean sector to invest.

In the near term, Singhania's preference would be more for the infrastructure space than real estate.

For banks, "we already have seen the worst of NPA creation. Government's effort to resolve NPA mess through various measures is a great move for banks," Singhania said.

Corporate banks should eventually be looked at very optimistically in near-to-medium term, he added.

In PSU banks, he prefers largecaps because their underlying assets (like insurance, mutual funds businesses etc) are growing very rapidly. However, he feels small banks will find it difficult to attract savings and fixed deposits.
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