Bullish on ONGC, Cairn: F&C Asset Management

Experts appear bullish on India as it looks promising. Speaking about the optimism Sam Mahtani, Director, Emerging Market Equities, F&C Asset Management says in an interview to CNBC-TV18 that he is looking for a 12-15% return in over a year’s time.

“We think there is scope for upside. Its not at the extreme level currently we think valuations are sort of fair value, around 14.5-15x earnings. With the expectation of atleast 20% earnings growth for the next couple of years, we think the multiple will stay high in India. So we still expect the market to move up over the next 12-18 months," he adds.

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Mahtani is expecting 8.5% GDP growth in India and thinks that it will lead the market to continue to rally over the next 12 months.

“We think there is scope for upside. Its not at the extreme level currently we think valuations are sort of fair value, around 14.5-15x earnings.  With the expectation of atleast 20% earnings growth for the next couple of years, we think the multiple will stay high in India. So we still expect the market to move up over the next 12-18 months,” he explains.

As a investment strategy, he advised buying ONGC on correction. Besides he is also bullish on Cairn India.

He believes that the concerns about Europe have faded a bit.

“Yields have come down in some of the peripherals. We think that the worst of the crisis appears to be over. We think we are at a high level now and we will probably maintain a higher sort of trading range at the next several months from here on," he adds further.

Here is a verbatim transcript of the exclusive interview with Sam Mahtani on CNBC-TV18. Also watch the accompanying video.

Q: Now that heavy news flow coming to an end with earning season behind us, the European stress test also out, what do you think will be the key triggers going into August?

A: We are still very bullish on India, on a 12-month. As you said the earnings season is kind of coming through. We also had the interest rate hike this week, but you know ultimately we still think that the domestic demand story in India is very positive. We are expecting around 8.5% GDP (gross domestic product) growth. We think that will lead to market to continue to rally over the next 12 months. We are pretty comfortable forecasting a return of around 12-15% for the market over the next 12 months based on the macro backdrop.