Himadri Buchmoneycontrol.com
Good monsoon, pay hikes for government employees and stable global markets should lead the stock market higher, though the pace could be a bit slower compared to the past few months, feels Gopal Agrawal, Chief Investment Officer at Mirae Mutual Fund.
With benchmark indices having risen nearly 30 percent from their February lows, he expects a consolidation phase before a big upswing.
A gold medalist chemical engineer by training, 43-year old Agrawal manages a little over Rs 3000 crore across the two main equity schemes of Mirae—the Opportunities Fund and the Emerging Bluechip Fund.
Falling interest rates will be one of the key drivers of investments into equities, says Agrawal, who feels the RBI has room to cut interest rates by 25-50 basis in 2016. Moderate inflation, strong capital flows and controlled current account deficit control strengthen the case for a lower interest rates, he says.
“Because of lower interest rate cycle, liquidity will remain strong, earnings have bottomed, government is doing a good job,” he said in an interview to moneycontrol.com, adding, “…interest rates are falling so people are finding equity as an asset class very attractive.”
Agrawal is positive on the consumption theme and plans to hold on to the consumer stocks in his portfolios as they are expected to perform well going ahead.
The fund house is also upbeat on oil and gas distribution companies, automobiles, and media companies.
“We are positive on some global cyclicals also because we think worst is behind and an earnings recovery is expected,” a mature and calm Agrawal said.
Banking is another sector that the fund house is upbeat on, particularly private sector banks. Recently, Agrawal’s funds have also added some public sector banks to their holdings.
On the rationale for being overweight on the banking sector, Agrawal said: “We believe consumer lending will continue to do very well as (interest) rates will come down. We are positive on Indian economy, so lending cycle is expected to be good and in turn help margins of the bank.”
He is bearish on the telecom and information technology sectors.
“In the IT space, the old legacy businesses are being replaced by digital and cloud and this transformation is in full process because of which you may see some pricing pressure,” he said.
“ Legacy businesses have to be supplemented by digital and cloud. This transformation will take its own time,” Agrawal said.
Agrawal said he was not avoiding investments in the telecom sector and would be a buyer if a good company was available at a reasonable valuation of 14 to 15 times forward earnings.
The fund house currently holds only 2 percent cash in its portfolio and utilizes volatility in the market to invest, Agrawal said.
Agrawal’s advice to investors is to utilize consolidation in the market for staggered investments as the broader trend remains bullish.
A big fan of Swami Vivekananda’s teachings, Agrawal is also a sports-lover and takes keen interest in culture.
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