Among midcaps, Ratnesh Kumar recommends caution on pure lending plays, but likes service offering sectors such as insurance or asset managers.
The market began the New Year on a very positive note, with indices hitting fresh record highs. The Nifty achieved 10,600-mark on Monday, while the Sensex reclaimed mount 34,000 as well.
But, going forward, what should be the strategy for investors with valuation concerns emerging among market experts? Ratnesh Kumar, MD and CEO of BOBCAPS believes asset allocation should be favoured toward cyclicals.
“We are looking forward to growth revival from low base and events such as demonetisation and GST. You had capex at low point too,” Kumar told CNBC-TV18 in an interview.
These point to potential cyclical recovery and the focus is towards higher weightage around that, keeping sectors such as auto and cement in mind, he said.
Speaking on the earnings growth, Kumar sees H2 of FY18 to see around 20 percent earnings growth and for the entire year, the growth is likely to be around 8-10 percent. For FY19, he is anticipating an earnings growth of 15-16 percent.Among midcaps, he recommends caution on pure lending plays, but likes service offering sectors such as insurance or asset managers. He prefers staying away from pharmaceuticals space, but sees potential among metals.