Manish Kumar chief investment officer at ICICI Prudential Life Insurance is betting on metal and auto shares to deliver superior returns even as the broader market is likely to remain range-bound for a while. As on February 28, 2011, his firm had a little over Rs 38,000 crore invested in equities, making it the second biggest equity investor among domestic players, next to only the Life Insurance Corporation of India.
"Market will remain range-bound for another six months, though that range may change a bit on either side," Kumar said in an interview with Moneycontrol.com.
"We had a similar view six months ago, but that was for a different set of reasons. Then the earnings momentum was strong, but valuations were expensive. Also, robust foreign funds were neutralised by too many share issuances by companies.
Right now, valuations appear fair, but there are headwinds in the economy that could eventually impact earnings growth. We are seeing a slight easing in the economic growth and the investment momentum.
In addition, inflation has remained high despite the efforts to tame it. "Because of these factors, earnings growth for FY12 (April 2011-March 2012) could be in the low- to mid-teens. We are cautious on the economic growth for the coming fiscal and expect it between 7.5-8.0%, even though the government has guided (8.75-9.25%) much higher," Kumar said.
Insurance companies are normally big buyers of shares during the January-March quarter, which is when they collect maximum premium as people invest in insurance schemes to save on tax.
But this time, inflows into insurance schemes
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