Daily Voice: Focus on these 3 sectors including telecom, says this fund manager

Riya Oswal Bafna is the co-fund manager at Purnartha

Riya Oswal Bafna of Purnartha believes two-wheeler vehicles will do relatively better than commercial and passenger vehicles in the auto space.

Purnartha remains focused on capital goods & consumer discretionary such as wires and cables and pipes, telecommunication, and energy, says the Co-Fund Manager of Purnartha.

Chartered Accountant Riya with more than 12 years of experience in the financial industry, who looks at PMS and AIF at Purnartha feels largecaps offer valuation comfort along with reasonable earnings growth, but the high multiple of mid and small caps create discomfort.

Are you still bullish on auto space?

In Q1FY2025, the automotive sector experienced slower sales and high dealer inventory levels. However, sales typically improve during the festival season in Q2 and Q3. Companies are hopeful for a recovery, supported by favourable monsoon conditions and increased crop revenues. We think 2-wheeler will do relatively better than commercial vehicle and passenger vehicles.

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Riya Oswal Bafna

Co-Fund Manager|Purnartha

Are you sure about the 25bps cut in fed funds rate in the September policy meeting?

Given the current situation, steep rate cuts are unlikely. Although unemployment has slowed, it should not provoke significant concern. The Fed is actively considering rate cuts in the future if unemployment data & inflation remains on expected trajectory becomes.

If the Fed delivers the same, then will RBI follow the path in October?

During the current interest rate cycle, India has raised its rates from 4 percent to 6.5 percent, while the US Federal Reserve has increased its rates from zero percent to 5.25-5.5 percent since 2022.

This illustrates that although the Reserve Bank of India’s decisions may align directionally with the US Fed’s, the magnitude of the rate changes differs. Also, the decisions of RBI would depend on the inflation which would entail more on food inflation, which has not eased since the rate hike cycle from May 2022. So, RBI might act in same direction but with delay and lesser cuts.

Given the consistent run quarter after quarter, do you see the market ending the calendar with 15-20 percent gains? What are the triggers to watch?

Difficult to comment on market movement, largecaps offer valuation comfort along with reasonable earnings growth. The high multiple of mid and small caps create discomfort but earnings growth excluding the current quarter has been higher.

We need to be watchful of the changing trend, so we currently think it is better to place ourselves in largecaps where liquidity is higher and switch in case of an opportunity. The key trigger to watch out for going forward margin expansion and demand through volume growth in this period of corporate profitability which would see a few hiccups going forward.

Where do you put your money amongst sectors?

We remain focused on capital goods & consumer discretionary such as wires and cables and pipes, telecommunication, and energy as our invested strategy. For themes to play out, sectorally, we are watching out bottom-up approach which would include companies within a sector being witnessing margin expansion, or demand growth or valuation comfort. So, wherever we find 2 out of the three drivers within a sector, we would evaluate the opportunity in depth.

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