Atul Suri, CEO of Marathon Trends Advisory Pvt Ltd, a Sebi-registered Portfolio Management Services (PMS), believes that auto, auto ancillary, infrastructure and real estate sectors can give positive surprises once the market stabilises.
“I think market correction is a very interesting phase and I am a great believer of the fact that 'stocks that fall less in falling markets are the leaders of the next bull market' and that holds true for these sectors as well,” Suri said in an interview with CNBC TV18 on June 21.
Among the individual sectors, he sees strong performance from the auto sector. The sector had been underperforming, was unloved but has performed really well and stocks have held on strongly in the correction that is being witnessed over the past six to nine months.
“In this scenario, we have a dual cocktail – the stocks have fallen less and they have under-ownership,” Suri said. He believes that under-ownership is a very important factor because as and when the sector moves up and people don’t have it in their portfolio, the institutional allocation has to follow it up and increase the ownership because that is how they will be able to match up to the benchmarks.
Apart from core auto players like Tata Motors, Ashok Leyland, there are lot of auto-ancillary and related auto players where he sees a lot of action and excitement. For example, ball bearings which has very few manufacturers / companies but the performance of these stocks has been very good especially when the markets are falling. In fact, most of these stocks are making life time highs.
“So most of the auto associated plays are seeing lot of action which makes me feel that whenever the markets stabilize, the under-owned, under-loved, under-covered sector might actually surprise on the upside because ultimately it is the surprises that drives the market”, Suri said.
He expects infrastructure and real estate sectors also to do well. According to him, “Infra in particular is very similar to auto sector”. The infra stocks have been underperforming for more than a decade. In 2008 they had topped off but most of them are still trading 90 percent below those levels. “This is again an under-loved, under-owned and totally ignored kind of space”.
But, in the ongoing correction there are lot of infra / engineering stocks that have held on very well. “This gives a sense of confidence & optimism about the overall economy as both the infra and auto are very close to the overall economy and whenever these things start moving together, we see a certain underlying pick-up and that is what builds in the optimism”, he said while exuding confidence in India’s economy.
Real estate sector has also the same similarities as the auto and infra and apart from the top names in the real sector, there are lot of related and second string players which have held on quite well and can spring surprises in future.
There have been talks of global markets and India’s relative outperformance. “All outperformances come because how we are doing as an economy and that gives me the sense of confidence that underlying economy has much more strength and as things stabilize, these sectors can emerge really well and surprise all of us”, Suri said in conclusion.
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