During the last 10 years most of the Nifty bottoms have happened around 20 PE levels and in that sense for long-term investors current softness is surely a good opportunity to buy Nifty large cap stocks, said Shailendra Kumar, the Chief Investment Officer at Narnolia Financial Services in an interview to Moneycontrol.
Nifty now trades at PE of 20.35 on a trailing twelve-month basis.
He currentlys find value in power financing PSUs, power generation PSUs, and select power ancillary MNCs. Further, according to him, private bank valuations appear compelling. "The Nifty Private Bank's price-to-book ratio, currently around 2.2 on a trailing twelve-month basis, is near historic lows," said Shailendra Kumar with more than two decades of experience in the fund management and investment advisory.
Which sectors have you added exposure to, and which sectors have you exited during the recent correction?
We've divested from a few portfolio companies operating in high-growth sectors (renewables, electronics manufacturing, and capital goods) due to short-term growth and margin challenges anticipated in FY26. While their long-term growth potential remains promising, these companies face near-term headwinds, notably a slowdown in their addressable markets.
Conversely, we've increased our exposure to the financial sector, where we currently see more favourable opportunities.
Do you expect the tariff risk to continue through the June quarter? Do you foresee any major impact from the tariffs on India?
Tariff-related issues pose a significant risk to global economic growth and create sectoral uncertainty, demanding a flexible strategy. The coming weeks are critical, with the US President setting April 2 as the earliest date for reciprocal tariffs. Clarity may emerge in early March, as we observe the handling of the one-month tariff postponements on Canada and Mexico, and the decisions regarding steel and aluminum tariffs on March 12.
The specifics of the reciprocal tariffs—whether country-specific, product-specific, or a combination—remain unclear. In structural sense for India, complete clarity will emerge after the anticipated US-India trade deal during the fall of 2025. While we believe India will ultimately benefit from the global trade realignment, with the US aiming to increase bilateral trade to $500 billion, specific sectors will experience varying impacts. Therefore as investors, we need to be agile to capitalize on emerging opportunities and mitigate potential sector risks.
Is now a good time to buy power and ancillaries stocks, especially after the recent sell-off?
We currently find value in power financing PSUs, power generation PSUs, and select power ancillary MNCs.
Even though timing the market is difficult, do you think the market is near the bottom now?
Nifty now trades at PE of 20.35 on a trailing twelve-month basis. During the last 10 years most of the Nifty bottoms have happened around 20 PE levels and in that sense for long-term investors current softness is surely a good opportunity to buy Nifty large cap stocks.
Are midcaps and smallcaps still looking expensive, even after the sharp corrections over the past few months?
Although the Nifty Mid Cap and Small Cap indices have declined 15% and 20% respectively from their peaks, they've still not reached levels that typically signal a strong buying opportunity. This aligns with our view, held since August that these segments required a price and time correction. While select mid and small-cap stocks have become attractive, broader opportunities will likely emerge with further price and/or time consolidation.
Are the valuations of private banks and large NBFCs attractive?
Private bank valuations appear compelling. The Nifty Private Bank's price-to-book ratio, currently around 2.2 on a trailing twelve-month basis, is near historic lows, comparable only to the sharp declines seen during the Global Financial Crisis and the Covid-19 pandemic. We also expect improving business conditions and financials for private banks.
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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