According to Umeshkumar Mehta, CIO of Samco Mutual Fund, the pharma and healthcare sector is structurally strong considering multitudes of factors at play.
The cost structures, competitive positioning, research capability and availability of qualified professionals positions the Indian pharma space in a sweet spot, he said in an interview to Moneycontrol.
Further, pharma and healthcare will benefit from the China+1 story gaining further ground as the US-China tariff war intensifies, he added.
Further, along with pharma & healthcare, "we expect financials, consumer staples to perform well in the next bull market whenever it begins, given the selective tailwinds of earnings growth are visible for these sectors," said Umeshkumar who has more than 25 years of experience in the Indian capital markets.
Where would you prefer to bet, as valuations turn attractive in most sectors after the sharp correction?
We believe that the markets in the medium term are going to favour bottoms up stock picking. We would focus on selectively identifying opportunities in the large cap space given the valuations are fairly reasonable and below the ten-year median levels. This makes the space attractive to bet on, considering higher relative earnings predictability during times of slowdown and uncertainty.
Are you bullish on the pharma and healthcare sectors?
The Pharma and Healthcare sector is structurally strong considering multitudes of factors at play. The cost structures, competitive positioning, research capability and availability of qualified professionals positions the Indian Pharma space in a sweet spot. Moreover, the healthcare space consisting of diagnostics and hospitals are bound to sustainably grow as healthcare penetration in India continues to improve and remain buoyant.
Which sectors will drive the next bull run whenever it begins?
We expect Financials, Pharma & Healthcare, Consumer Staples to perform well in the next bull market whenever it begins, given the selective tailwinds of earnings growth are visible for these sectors. Pharma and Healthcare will benefit from the China+1 story gaining further ground as the US-China tariff war intensifies. Moreover, the government’s change in the tax bracket would induce incremental growth for companies in the consumer staple space.
Do you expect a significant pick-up in government capex in FY26, despite it being slow even in Q4FY25?
The pending capex initiatives which had lagged due to the nationwide elections are bound to have a trickle effect in the next few quarters. However, as the overall stance of the government has been populist in the Union Budget, the infrastructure pickup in the government capex will be selective and not broad based across segments.
Most experts believe FII flows will return only when there are signs of strong earnings and economic recovery. Do you agree?
The shift of foreign institutional investors (FIIs) from Emerging markets including India to the Developed markets, especially the USA, has been on account of increased opportunities given the new regime’s commitment to towards Making America Great Again (MAGA) but if, those hopes are not fulfilled then huge amount of money can flow back to the emerging markets including India. The economic recovery would further propel the growth as and when the domestic macro factors stabilise.
Do you believe a major recovery in the equity markets is unlikely in the first half of 2025?
Historically, it has been seen that winning sectors, stocks and market segments change. In the last few quarters/years, small and midcaps have delivered far superior returns. Looking forward, the new emerging winners would be the large-caps. Moreover, the large-caps which are in momentum, exhibiting strong earnings growth and price performances are bound to outperform the broader markets.
In this backdrop, we have entered the market with our New Fund Offering (NFO) of Samco Large Cap Fund. This fund is unique in the Large Cap category as instead of following traditional buy and hold approach, it will follow Momentum strategy and will actively hedge the portfolio to limit the draw downs.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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