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Volatile market offers investment opportunity, bullish on TCS, Infosys, HDFC Bank & Kotak Mahindra Bank: Hugh Young

India has fared better than other markets and there is still opportunity amidst this weakness and are looking at ICICI Bank, HDFC Bank, Kotak Mahindra Bank, TCS, and Infosys as stocks that offer huge growth prospects, says Aberdeen Standard Investments' Hugh Young.

February 28, 2022 / 02:53 PM IST

Geopolitical tensions between Russia and Ukraine have led to global stock markets witnessing a downside this week. There is now fear of the crisis growing as sanctions against Russia set in. Indian benchmark indices are also not immune to the jitters.

As uncertainty is expected to continue on account of geopolitical tensions rising, Hugh Young, MD, Asia Pacific Region, Aberdeen Standard Investments, shares his outlook speaking with CNBC-TV18, says they would see weakness as an opportunity to invest in India as the country has fared better than other markets in Asia, does not think Indian market will decline much from now on.

He says, "What is going on in Europe is pretty appalling, could have disastrous consequences. Generally, we view such market weaknesses are an opportunity. They throw for us some far better value. India relatively is an expensive market. It has fared very well."

Though he terms Indian market as expensive, they would look at individual stocks having good value.

"Will see if any stocks throw up value. Earnings are better according to expectations. That means valuations are looking good to us. We are fairly comfortable with the companies. The problem is with the macro-economic and political equation. Rising inflation and interest rates add to more troubles. Russia on the other hand is troubling all," Hugh Young explains.

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On a question about comfortable earnings from India, and if he sees any downside in the Indian markets from now on, he says the current earnings picture looks comfortable, and it is not worrying for them in the short term, tells there is potential downside risk as inflation and high interest rates come into picture at their appropriate time.

"So far earnings are encouraging. We have to see what happens on the inflation and interest rates front. The earnings outlook for the next year look comfortable. India is a well-rated market. Downside potential is there. It is could be due to external issues. We do not worry much about the short term," says Hugh Young.

When asked on their fresh investments in ICIC Bank, he says ICICU Bank's quality has been improving and this has made them enter into this stock, also prefers HDFC Bank and Kotak Mahindra Bank in this space at present as they offer huge growth prospects and are narrowly volatile.

Explaining his rationale behind Aberdeen Standard Investments' ICICI Bank investments, Hugh Young says, "Extremely bullish on CICI. Many years ago, we were holders of ICICI. HDFC and Kotak Mahindra are also of good quality in the present market. ICICI improving with its quality and are comfortable with it. Made an addition to our financial positions."

Responding to a question on Aberdeen's holdings in Infosys and TCS and whether these stocks are too overvalued in terms of global position, the market expert says both these world-class stocks have adapted well to the new world.

He says, "In the Indian context they are quality companies. Looking at Infosys and TCS as international IT players. Both adapted to the new world. Both are world-class stocks."

Speaking on HUL and consumer staple names and if underperformance will continue in this space for some more time, he says names likes HUL are poor performers, and that inflation in certain input prices is taking a toll, but thinks in the long term, such stocks will perform well.

Giving his opinion on the upcoming LIC IPO and whether they would buy, Hugh Young tells, "Too early to say. Lot of things can happen. We have to workout whether we can invest. We have holdings within this space. The big question is how independent of the government LIC becomes."

On participating in new-age IPOs like Nykaa, PayTM and both of them not really making an impact after they took off, he says Nykaa and Pay TM have been disappointing.

And, whether it will be tough for them on earnings front, he says, "This is quite common phenomenon worldwide. we have put in small amount of money and it is disappointing. We have very small percentage of investments in these. So a question mark arises abut IPOs without earnings. Facebook got a tremendous start and then entered into bumpy period. And now earnings are coming through. This is my analysis. It is part of the quality investments. It is this balance we have to do."

Hugh Young says they do not see Maruti Suzuki company lagging behind in the fast-growing electric vehicle segment though their first electric vehicle will be launched in 2023.

"It is decently run company. The first mover does not always get success. Not hugely expensive. It has very little of our portfolio. So in these terms, it is a good investment option," Hugh Young says on initiating their position in Maruti Suzuki.

Sharing his view on the US Fed rate hike fears in March, he says, "We should be in a rate rising cycle. Inflation has risen sharply. It has gone out of control. But due to geopolitical situation, it may be put on hold. This will cause market uncertainty worldwide and led to more volatility."



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first published: Feb 28, 2022 01:44 pm
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