Amey Sathe, fund manager at Tata Asset Management, is overweight on BFSI due to a healthy EPS growth outlook and reasonable valuation. Moreover, among sectors, he likes the consumer sector (staples as well as discretionary) since he believes earnings are bottoming out and sector is significantly under owned.
"We continue to remain positive on power generation as well as power utilities," said Amey who has over 17 years of experience in the asset management.
Are you bullish on the entire BFSI space or you want to be selective? Your top bets?
BFSI sector may offer healthy earnings growth coupled with reasonable valuation. The sector has significantly underperformed due to large FII outflows over the last two years despite robust earnings growth.
At this point, looking at valuation and profitability, we may prefer private lenders over PSU lenders. We also see lot of value especially in life insurance stocks and select NBFCs/HFCs.
Do you see major risk factors for India equity markets in the current financial year?
Indian economy remains in healthy condition and most of the macro parameters are indicating stable to improving economic environment. However, having a stable government and policy continuation are crucial for India’s equity market especially in the current year. Additionally, monsoon outcome (both distribution and quantum) is important on the back of deficient rains of the last year.
Do you think this is the decade for India and FIIs are waiting for the general elections results to pump in billions of money into India?
Conclusive outcome in general election might keep sentiments positive. However, inflows from FIIs are a function of macro stability, earnings growth, and relative valuation in various markets. Having said that, we are likely to see sharp inflows in government bonds on the back of JP Morgan Index Inclusion from July onwards.
Which are the sectors that you have a bullish view on and why?
Currently we are overweight on BFSI due to a healthy EPS growth outlook and reasonable valuation. We also like consumer sector (staples as well as discretionary) since we believe earnings are bottoming out and the sector is significantly under owned.
The consumer sector could also act as a good defensive play. We continue to remain positive on power generation as well as power utilities.
Do you expect domestic inflow to equity markets to be unstoppable in the coming years?
In the long term, domestic inflows in equity markets are a function of under penetration of financial savings in the country and penetration levels remain low for India compared to other developed as well as developing countries. Hence, we are likely to remain positive on the structural story of Indian equity markets. However, in the short term, inflows are a function of valuation, earnings growth, and relative returns compared to other asset classes.
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