Max Life expects market to consolidate going forward, names 4 sectors to watch out for

With the market returning just around 3-5 percent in this calendar year so far, some experts feel that consolidation is likely to be the theme going forward.

Terming the market’s current position as ‘interesting’, Mihir Vora at Max Life Insurance highlighted that flows from domestic investors were very strong, even as FIIs continue to sell across emerging markets.

“Local, speculative and HNI (high net worth individuals) positioning is also very light especially after the fall in midcaps,” Vora, Director and Chief Investment Officer at Max Life Insurance told CNBC-TV18 in an interview.

For an investor in mutual funds, he suggests looking at things from a long-term perspective. “The positive side is that some of the stocks are so cheap that alpha generations are getting created. As long-term investors, we are in a situation where valuations look expensive, but due to divergences, there is scope for stock picking,” he told the channel.

In fact, given the low base of earnings last year, he expects that trend to be better as well and based on these factors, long-term investors need not be worried, he said.

Speaking on the finance space, Vora suggests sticking to private sector names as PSU counterparts are getting vacated due to lack of capital. So, both private sector banks and NBFC (non-banking financial companies) will have a field day in grabbing market share, he said.

Additionally, he also pointed out the opening up of fresh space in SME and larger corporate financing for private banks.

On information technology (IT) space, there may be some more steam left as it is coming after significant underperformance. “The valuations are still not that expensive and there are some companies with good cash flow as well,” he added.

For pharmaceutical companies, he believes that the worse may be over on the regulatory and pricing front. This is a sector for patient investors, he added.

Lastly, he concluded his views by speaking on real estate. One could look at stocks which have well-managed balance sheets as well.