Rohit Sah of TCW is bullish on Indian equities and says small and midcaps are the next big winners. However, he cautions the next few months are going to be rocky.
Speaking to CNBC-TV18, Sah says: I still remain very optimistic for the longer-term. I think in the next ten years, this (India) is going to be one of the best, if not the best performing market anywhere in the world. Below are the excerpts of Rohit Sah’s interview with Shereen Bhan on CNBC-TV18.
In a medium and long-term basis, India still looks great. There are very few countries which have the growth potential that India does. So, I still remain very optimistic, longer term. I think in the next ten years, this is going to be one of the best, if not the best performing market anywhere in the world. I would point out small and midcaps in India as the next place to find the real big winners in our careers. The next few months, however, are going to be a bit rocky.
Well-run banks, which are on the relatively lower price side are good. My personal preference is DCB Bank. It is a smaller bank; it is well below the radar of most often Foreign Institutional Investors (FIIs) and even the domestic investors. City Union Bank is another great bank with excellent asset quality. They know how to run the books. On the non banking financial institutions (NBFCs) side there's companies like Bajaj Finance.
In the next bull run that begins it is not going to be IT stocks which will do the best. Pharma - Lupin, Sun Pharma are phenomenal companies with brilliant management. But they have reached the valuation limit.
For the next 2-3 years it is quite possible they go nowhere. Then you have consumer stable Colgate-Palmolive and all the likes. Now 25-27 millions are born every year so 27 more million mouths to feed or to give a toothpaste right? That is not an economic story, that is a demographic, just more Indians getting born.
It was, I would call it an escape from India story. You are trying to escape all the problems in an economy but trying to play the India story. So, that India story as far as consumer stables are concerned is over. I think you need to buy the Bharat story and the Bharat story would be things like the non -bank financials, the private sector banks and the selected infrastructure story.
I think the easy themes are urbanisation in India, the internet in India and what the internet sector will do in India. In urbanisation there are some very easy ways to play them. The usual favourite is Asian Paints but I would go for the next level which is Kajaria Ceramics and Century Ply those are the easy ways of playing the urbanisation theme.
People also like these housing finance companies but you are better off buying a diversified financial institution rather than a very specific financial institution because when you are betting on only one kind of business, then there is risk of regulations. We know India is very good at destroying good story. So, that is why DCB Bank is a much better story than say Dewan Finance or something like that.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
