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Last Updated : May 27, 2019 11:16 AM IST | Source: Moneycontrol.com

Investors should position their portfolio in accordance with these 3 priorities of Modi 2.0

Understanding the new government's priorities will help investors ride the rally and position the investment portfolios accordingly, says Gaurav Dua

Kshitij Anand @kshanand
 
 
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It is important to understand the priorities of the new government that would enable the investors to ride the rally and position the investment portfolios accordingly, Gaurav Dua, Sr VP, Head – Strategy & Investments, Sharekhan by BNP Paribas, said in an interview with Moneycontrol's Kshitij Anand. Excerpts:

Q. What is the range you are looking at for Nifty or Sensex based on the election results? Do you think we are heading for new highs in 2019?

A. With the NDA government returning to power with a majority mandate, the sentiments to remain upbeat now.

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We expect another 5-8 percent kind of gains in Nifty/Sensex to a new high level though there are serious challenges faced by the Indian economy like slowing consumption, squeeze on credit, fiscal deficit, global uncertainties that need to be addressed to support a sustained rally in the equity market.

Q. What are the sectors one can bet on, on the basis of which government forms at the Centre and why?

A. It is important to understand the priorities of the new government that would enable the investors to ride the rally and position the investment portfolios accordingly.

Priority Goal 1:

Rural development to ease farm stress through the development of rural infra (roads, housing, etc.) and boosting farm income. News reports suggest Rs 25,00,000 crore investments are planned by the government over the next 5-8 years

Sectors which are likely to benefit directly or indirectly by the outlay include names like consumer companies which are driven by rural demand such as farm equipment, rural financing companies, building material including cement and agri-inputs companies.

Priority Goal 2:

Capital investment in infra development especially water linkage, roads among others will be in focus. The BJP manifesto puts out a figure of Rs 10,00,000 crore and highlighted by PM Modi in his speeches that water is the next big priority after toilets.

Sectors which will be in focus include contractors, construction companies, cement, as well as electric distribution.

Priority Goal 3:

National Security – defense/energy and PSUs.

Q. As a new government takes center stage, should investors look at select mid- and small-caps for the next 5 years?

A. Once the benchmark indices, Nifty/Sensex, stabilizes at a new high level. We can see much better gains in midcap/smallcap space too.

Q. What would be your advice to investors for the next 5 years who are probably starting their journey with this new government at the Centre?

A. As an investor, one needs to have exposure to equities to generate reasonable returns on their overall portfolios with investment in the various asset class.

We expect equities to outperform over the next five years as the benefits of bold structural reforms like GST, IBC, etc. begin to yield results.

Also, the earnings are at the cusp of a strong revival with a turnaround in banks after the peaking of asset quality issues.

Q. Which are the top 5 fundamentally strong stocks which investors can look at buying for the next 5 years?

A. In addition to the above-mentioned policy priorities of the new government and the emerging investment opportunities, there are structural growth themes that need to be part of a long term investment portfolio.

Based on it our five picks are ICICI Bank, HDFC Standard Life, L&T, Aarti Industries, PI Industries, Gujarat Gas, KNR Construction, Polycab, Federal Bank.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on May 25, 2019 08:38 am
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