"Since the domestic demand outlook is better than the global one, we believe that capex to meet the requirement of the former has better visibility. In that context, power looks to be a sweet spot as there has been under-investment for quite a few years," Manish Gunwani, Head – Equities at Bandhan AMC says in an interview to Moneycontrol.
Manish with over 25 years of experience in equity research as well as fund management feels lower oil prices are definitely a positive for the OMC (oil marketing companies) and valuations are attractive.
However, one also has to consider the high levels of capex and the fact that if EV (electric vehicle) penetration goes up that may pose a threat to the oil marketing business, he feels.
Do you expect Federal Reserve to announce 2 more rate hikes before the end of 2023? What is the possibility of recession?
The general expectation right now is that Fed will hike once but the second hike is not very certain. If we see the history of the last 5-6 rate hiking cycles of the Fed and compare the intensity and velocity of this cycle we need to build in a high probability that there is a recession in the US at some point.
One sector where you have a super bullish view, in the capex theme?
Since the domestic demand outlook is better than the global one, we believe that capex to meet the requirement of the former has better visibility. In that context, power looks to be a sweet spot as there has been under-investment for quite a few years and also there is a transition towards renewables which also needs more investment in the transmission grid.
Do you think there is a slowdown in consumption, but the Nifty Consumption traded at record high and jumped over 20 percent from March lows?
We are continuing to see affluent consumption remain strong with segments like real estate, hotels, aviation, etc. witnessing healthy demand momentum. The mass consumption is yet to pick up but we expect that to improve as the twin shocks of COVID/inflation fade away.
Is it the time to bet on OMCs given the stability in crude oil prices?
Lower oil prices are definitely a positive for the OMC (oil marketing companies) and valuations are attractive. However one also has to consider the high levels of capex and the fact that if EV (electric vehicle) penetration goes up that may pose a threat to the oil marketing business.
What is your strategy behind the launch of Financial Services Fund?
The sector has a solid track record and is diversified across 5 broad sectors with 19 sub-sectors. Lower credit penetration compared to peer economies, with stronger bank positioning, and growing digitization, an opportunity that may pick up. Also, from the valuation perspective, the financial services sector (P/E) is trading at reasonable levels, which indicates a considerable return dispersion.
Looking at the long-term growth opportunities of this sector and the valuation levels, Bandhan Financial Services Fund could offer better opportunities over the long term. The fund will follow a bottom-up stock selection and will be an actively managed portfolio rather than hugging the benchmark.
Being active in management means it is a growth-oriented portfolio with a high runway for growth. The fund manager will allocate funds depending on the price and value gap assessment and will build up positions taking advantage of the volatility.
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