In the last nine months, the market was divergent, where domestic consumption oriented stocks were doing very well, while midcaps, small caps and some largecap names were correcting significantly, according to Anand Shah.
In an interview to CNBC-TV18, Anand Shah, deputy chief executive officer and head of investments, said, "As far as the market is concerned, the only thing that matters is earnings and on that front, there is good news. After 3-4 years of consolidation, we are going towards double-digit earnings growth rate slowly."
Shah said in the last nine months, the market was divergent, where domestic consumption oriented stocks were doing very well, while midcaps, small caps and some largecap names were correcting significantly.
According to Shah, domestic consumption oriented stocks did well backed by government’s rural push, but they were expensive.
"In the last one month, the rupee has depreciated and crude prices are higher, so some slowdown can happen in these good domestic consumption stories like auto sales. So, the corrections seen in these stocks could be healthy, because there is no fundamental issue with them, Shah added.
Shah said the business headwinds, which they faced in 2016-2017 are now weakening and there has been recovery in business for both IT and pharma, "So all this, along with the benefit of rupee depreciation is making sure that they are likely to survive any sort of downturn in the market."
"Non-banking financial companies (NBFCs), which have a good franchise, distribution network, treasury management, asset liability management (ALM) management and where credit policy is measured and there is no non-performing assets (NPA) risk, those companies will have less competition than before," Shah added.
Talking about rupee depreciation, Shah said, "It's more or less in line with emerging market currencies and some developed markets. Although, the macros seem to have deteriorated in 2018 vis-à-vis 2017, they are still far better than 2013."Watch the video for more.