Daily Voice: This fund manager is bullish on large private banks, holds overweight position in IT space

Atul Mehra is the Fund Manager at Motilal Oswal Asset Management Company

"We like large private banks as a space and have large allocations to them in our large cap MF," Atul Mehra, the Fund Manager at Motilal Oswal Asset Management Company said in an interview to Moneycontrol.

He believes some of these private banks stocks are quite attractively valued today; and are offering compelling upsides or outperformance.

Further, He continues to be bullish on the prospects for the IT sector and has overweight positioning in most of their portfolios. "As we go through the US election; we believe this could be a clearing event for Fortune 500 companies to step up their spends on IT," said Atul with more than 15 years of experience in the investment management and capital market.

We continue to maintain our allocations in the auto sector. While the commentary is mixed on the near term outlook, we believe the medium to long term outlook remains intact. Autos in India – especially, passenger cars is amongst the lowest penetrated globally, also we’re going through premiumization shift in this sector from hatchbacks to SUVs. These trends are promising from a medium to long term perspective.

The provisioning for the banking sector has to be seen in the context of extremely low provisioning in the base quarter, hence to some extent the provisioning is normalizing and not a factor for concern. Having said that, we’re seeing some signs of stress in the unsecured portfolios; where we’ve seen outperformance by the market leading private sector bank. We like large private banks as a space and have large allocations to them in our large cap MF. We believe some of these stocks are quite attractively valued today; and offering compelling upsides / outperformance.

We need to monitor the upcoming election result in the US and the policies of the new government. That has the potential to shift the inflation and rate cut trajectory in the US.

We continue to be bullish on the prospects for the IT sector and have overweight positioning in most of our portfolios. As we go through the US election; we believe this could be a clearing event for Fortune 500 companies to step up their spends on IT. Additionally, lower interest rates should also help drive higher IT budgets.

From a medium to long term perspective, discretionary should do much better than the non-discretionary sector. As per capita incomes grow, the incremental consumer spend is much higher in the discretionary space versus the non-discretionary and that should drive long term growth outperformance for the discretionary sector.

While predicting the near term is a difficult exercise; as far as risks are concerned, the continued FII outflows and increasing pace of primary / secondary offerings in the form of IPOs / QIPs / OFS have an impact on the net flow positioning in the market, even as domestic MF inflows are very strong. US elections and policy is the other key near term risk and monitorable.